Retail gas prices reach lows as drivers hit the roads
Bernard Weinstein, economist and associate director of SMU's Maguire Energy Institute , talks about the current state of gasoline prices.
By Ellen Chang
A glut in supply pushed U.S. crude oil prices lower in July in stark contrast to vacationing drivers who embarked on more summer road trips.
Despite crude oil's rebound back to a peak in June, reaching above $50 a barrel, the decline in July marked more swings in 2016. In February, prices dipped to a startling 13-year low, but reversed course and rose by 60%.
The production in OPEC countries in Iraq, Iran and Saudi Arabia has not slowed down, putting downward pressure on prices. The supply disruptions in Canada, Libya and Nigeria were short-lived.
Refineries continue to purchase inexpensive crude oil and have been producing "record amounts" of gasoline, diesel and other fuels," said Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business in Dallas.
Retail prices are now at their lowest since 2004 and gasoline inventories in the U.S. are 11% higher compared to last year. With crude oil prices falling again, the average prices for consumers "should remain below $2 per gallon at least through the end of 2016," he said.
The strong demand for oil has not been high enough to combat the levels being produced by refineries, said Tony Starkey, an oil analysis manager for Platts Analytics, a forecasting and analytics unit of London-based S&P Global Platts.
"Gasoline prices have been falling because refineries have been making so much of it," he said.