Good News for Drivers: Gas Prices May Be Headed Lower

By: Anneken Tappe · May 02, 2024 · Reading Time: 2 minutes

Pump Prognosis

Between escalations in the Middle East, drone attacks on Russian oil refineries, and OPEC production cuts, the conditions seem ripe for gas prices to be on the rise. But so far that hasn’t happened.

The average price per gallon in the U.S. remains high, sitting at roughly $3.73 in April before it fell to $3.66 at the start of May. So what gives?

Fuel Factors

Even though geopolitical tensions continue to keep commodity markets on high alert, the threat of further escalation in the Middle East has eased for the time being.

And as far as oil production is concerned, high output in the U.S. has helped offset production cuts by OPEC, the Organization of the Petroleum Exporting Countries.

Road Ahead

Even though this is good news for drivers, risks persist. A major development in the Middle East or Russia could disrupt the oil supply and trickle through to the pump. Additionally, extreme heat sidelined U.S. refineries last year and could again this summer. A heavy hurricane season might also impact refineries.

Energy is needed at every level of the economy, so the cost of oil and its derivative products matters a great deal.

Energy costs are also a big contributor to inflation, so easing costs will trickle through into economic data eventually as well.

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