Presidential candidates may want to blame or cheer gas prices; Analysts say, 'Not so fast'
HOUSTON - Even if gas prices aren't mentioned in the presidential debate between Donald Trump and Kamala Harris, they may help voters decide how they feel about the economy. The average price for gas in Houston is $2.82 a gallon, down $0.22 in the last month, according to AAA.
The current price is down $0.50 from a year ago, and up $1.07 from October 2020, just before the last election and during the pandemic.
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Politicians might want to make something of that, but the industry says there's no connection to this global commodity.
"That trend is really being driven by supply and demand dynamics, led by poor demand in China, and increased supply out of Canada and the United States," says Houston energy analyst Andy Lipow.
Simply put, we've got lots of fuel to go around, right now, and not enough global demand to push prices any higher. That's great news for domestic consumers who are generally driving less, after the summer months, and filling-up less as well.
Counterintuitively, hostilities and tensions in Ukraine and the Middle East have had little effect of prices. Neither, too, did production cuts of millions of barrels of oil by OPEC, which has signaled it will extend restrictions for months, to try to push prices higher.
In North America, U.S. and Canadian producers are flowing freely from projects that were financed over the last several years, and have to produce in order to pay off the investment. For now, that keeps prices low and gas more affordable, until reality catches up.
"Now that prices have sunk, what we are seeing is a slowdown in the number of drilling rigs that are being employed, which means that the rate of growth of increasing oil-production is going to slowdown over the next six to 12 months," says Lipow.
Oil prices hit a three-year low, trading just above $66 a barrel, at the close of business. Lipow expects even more, with gasoline prices projected to fall another $0.30 a gallon by the end of October, just before election day, with little change until next year regardless of who wins in November.