Photo: Dr StClaire from Pixabay
Gas prices trend lower, propped by declining oil prices and fears of a looming recession. Even so, it is not the time to pop the champagne, as analysts predict oil will get 40% more expensive by year’s end. This will surely drive the gas prices at the pump to never-seen-before levels.
Even though they’re not too far from the all-time highs, gas prices have steadily declined in the past month. This reflects the lower oil quotations, trending just above the $100 per barrel mark, down from more than $125 in March. The oil prices are also influenced by the analysts’ belief that a recession is coming, which would further slow consumption. There is no consensus, though, and Goldman Sachs predicts we will have the opposite.
According to strategists at the company, people should enjoy lower gas prices while they still can because the oil will get to $140 per barrel by year’s end. Goldman Sachs does not believe a recession will drive down oil prices, especially as China eases Covid-19 restrictions and the economy is up to speed again.
“A mild recession is not a risk for commodities,” said Goldman Sachs analysts in a research note cited by Business Insider. “The ongoing downturn in global economic growth [...] poses little threat to commodities demand and, given the inherent structural supply constraints, should not stand in the way of further physical goods inflation.”
In layman’s terms, even if a recession hits, it would not drive down oil prices, considering how the global economy relies on oil to move essential goods around. On the contrary, increased demand in other parts of the world and limited supply will continue to put pressure on oil prices, and that means more expensive fuel for everybody. With crude at $140 per barrel, we’re looking at more than 25% price hikes at the pump.
According to AAA, the national gas average price is now at $4.655 per gallon for regular unleaded gasoline, down from more than $5 per gallon. With the oil at $140, we might look at an average well above $6 per gallon in the coming months, with parts of the country above $8.
According to strategists at the company, people should enjoy lower gas prices while they still can because the oil will get to $140 per barrel by year’s end. Goldman Sachs does not believe a recession will drive down oil prices, especially as China eases Covid-19 restrictions and the economy is up to speed again.
“A mild recession is not a risk for commodities,” said Goldman Sachs analysts in a research note cited by Business Insider. “The ongoing downturn in global economic growth [...] poses little threat to commodities demand and, given the inherent structural supply constraints, should not stand in the way of further physical goods inflation.”
In layman’s terms, even if a recession hits, it would not drive down oil prices, considering how the global economy relies on oil to move essential goods around. On the contrary, increased demand in other parts of the world and limited supply will continue to put pressure on oil prices, and that means more expensive fuel for everybody. With crude at $140 per barrel, we’re looking at more than 25% price hikes at the pump.
According to AAA, the national gas average price is now at $4.655 per gallon for regular unleaded gasoline, down from more than $5 per gallon. With the oil at $140, we might look at an average well above $6 per gallon in the coming months, with parts of the country above $8.
Google News