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As the summer driving season approaches, the national average price for regular gasoline rose to a nominal record $4.37 per gallon on Tuesday. But relief may be on the way, with oil prices falling below $100 a barrel, down nearly 10 percent since the weekend.
It may take a week for prices at the pump to reflect fluctuations in crude oil prices, which fell more than $120 for the US benchmark West Texas intermediate in March. It closed at $99.76 on Tuesday.
This weakness reflects the slowdown in China’s economy due to the quarantine of several cities battling the COVID-19 outbreak and a growing consensus among traders that the global economy is also slowing.
“I think the consumer will take a little break here,” said Tom Kloza, head of global energy analysis at Oil Price Information Service. “Just watch out for July and August. I think the consumer will drive this summer, whether it’s $4 per gallon or $6 per gallon.”
Oil markets have been rocked by contradictory trends lately. Saudi Arabia lowered oil prices to its Asian customers over the weekend, which should put downward pressure on prices worldwide. However, Europe’s proposed embargo on Russian oil has raised expectations that global crude oil supplies will tighten and prices will increase.
Over the years, gas prices have soared as drivers hit the road for the summer. The national average price for a gallon of regular gasoline climbed an unusually fast 17 cents last week. It averaged $2.97 a year ago, according to the AAA motor club.
Gasoline prices vary widely across the country due to local taxes and regulations. Californian drivers pay an average of $5.84 for a regular gallon, while Texans pay $4.07.
Gasoline prices were at their highest in July 2008, when, adjusted for inflation, the average gallon of regular gasoline rose to about $5.40 in today’s dollars.
“We should see gasoline prices peak in the next two weeks,” said Michael Lynch, Head of Strategic Energy and Economic Research, who advises and analyzes the oil and gas industry. “Oil prices should come down because people will realize that Russian supply will not disappear as European sanctions are phased in. They will just be shifted to new customers.”
Diesel and jet fuel prices are rising faster than gasoline, putting more inflationary pressure on agriculture, shipping and travel. Natural gas prices are also fluctuating. They rose more than 3 percent on Tuesday after falling more than 11 percent on Monday.
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