Gasoline demand is down, but will prices follow in trend?
Local analysts aren’t surprised that demand for gasoline is down.
And while that trend may continue — even with the summer driving season gearing up — that doesn’t necessarily mean that gas prices won’t climb to record-shattering levels.
But Steve Agee, an economist with Oklahoma City University who also is president and chief operating officer of Agee Energy and chairman of the Oklahoma Energy Resources Board, is not making predictions on how high prices will go.
“If you could tell me where crude oil prices are going, I could make you a prediction. But at the margin…ultimately demand factors are going to decide this issue,” he says.
Agee agrees the latest data show consumers are choosing to buy less gasoline because of higher prices.
A survey released this week by OCU conducted with 700 people in a 16-state area, including Oklahoma, shows many people are driving less as a way to deal with higher prices while others are buying more economical cars or using mass transportation to get where they need to go.
Not everyone is cutting back on the quantities of gas they buy, but enough are for the impact to be felt, Agee said.
Still, don’t expect prices to fall yet.
Agee said the complexity of interaction involving oil prices, refineries, suppliers and consumers will have an impact on the price of gas during the next days, weeks and months.
To illustrate, he referred to another government report, that shows gasoline reserves had been rising for 17 of the past 18 weeks. But it fell by 3.5 million barrels just in the past week.
That’s because refineries produced less gasoline due to the high price of oil and increasing gasoline supplies.
Historically, the amount of gas consumers buy this time of the year increases because people typically take their cars on summer vacations.
Priced out of the market?
Bruce Bell, chairman emeritus of the Mid-Continent Oil & Gas Association of Oklahoma, believes time will tell whether that happens this year.
At the same time, Bell wonders whether the nation’s gasoline suppliers finally have priced themselves out of the market.
“When people have to pay that much a gallon, it really cuts into their other requirements,” Bell said. “So instead of running to the store three or four times a week, they are planning ahead and only going once.
“The luxury of people being able to drive anywhere they want and anytime they want may be a kind of a thing of the past for a while, at least until they adjust their budgets and get to where they can plan for it,” Bell said.
“It is a pretty big expense when they go to fill their tanks, and it is costing 70 or 80 bucks.”
Source: Trading Markets
Tags: prices, stock news, trends