Average gas prices in the U.S. could fall as low as $4 a gallon in the coming weeks after pushing above $5 in mid-June, a White House official said over the weekend. However, those “low” prices might not last very long.
Amos Hochstein, special presidential coordinator for international energy affairs, said he expects the average price to “come down more towards $4” a gallon, MarketWatch reported. “We already have many gas stations around the country that are below $4,” he said on CBS’s “Face the Nation” on July 17. “This is the fastest decline rate that we’ve seen against a major increase in oil prices during a war in Europe, where one of the parties in the war is the third-largest producer in the world. So these are extraordinary circumstances. We’ve taken very tough measures to address them right away, both for the American consumer but really for [the] global economy, too.”
Prices still have a ways to go before they hit $4 a gallon. The national average was $4.521 a gallon as of July 18, according to AAA. That’s down from $4.678 a gallon just a week prior and $4.989 a month before. The all-time high of $5.016 a gallon was set on June 14.
Hochstein gave much of the credit for falling prices to President Biden’s decision to release a million barrels of oil a day from U.S. emergency reserves. But while prices are undoubtedly on a downward trend of late, some experts warn that it’s only temporary, and that a fresh round of price surges could happen as soon as October.
Those concerns are tied to the timeline for stricter sanctions on Russian oil, the Washington Post reported. Under a worst-case scenario, Russia might retaliate by shutting its supply down altogether, which could push the price of oil to triple what it is today.
“If you were to ask me where could oil prices go, I would say pick a number,” Michael Tran, managing director for global energy strategy at RBC Capital, told the WaPo. “This is the tightest oil market we have seen in a generation or more.”
Meanwhile, some economists warn that measures being promoted by the White House — such as allowing Russian oil onto the market at reduced prices, taxing oil company “windfall” profits and cutting the federal gas tax — might not have the desired effect of easing prices at the pump permanently. “When things like this happen, we tend to focus on short-term fixes,” Christopher Knittel, a professor of applied economics at MIT’s Sloan School of Management, told the Washington Post. “But, unfortunately, gas prices are not really something you can fix in the short term.”
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