Gas Prices Possibly Peaked Short-Term; Long-Term Pump Prices Could Rise As US Shifts To EVs

Gasoline prices might have peaked, and optimists are expecting the trend to continue on a downwards path in the near future.

Late last month, demand for gasoline in the U.S. reached its highest level since before the COVID-19 pandemic. Now, a drop in demand could accompany falling crude oil prices to provide some relief at the pump for drivers across the country.

On Thursday, Andrew Gross, a spokesperson for AAA Gas Prices said that the recent surge in oil prices took a break this week. 

"If this oil price trend continues, drivers may see falling gas prices,” Gross wrote. 

Gasoline analyst Patrick De Haan said on Friday, he's "optimistic and hoping that [gas prices] have peaked." 

The price of a barrel of crude oil reached its lowest level since early April on Friday, at $78.

Crude oil prices had spiked in early April after the group of OPEC+ countries announced a surprise cut in production.

Gasoline inventories are also improving from their yearly low reached last week.

The national average for a gallon of regular gas was $3.68 on Friday, higher than last month’s figure of $3.43 but significantly lower than the year-ago price of $4.12.

The Future Is Not As Bright For Oil Prices In The Long Run

Gasoline prices in the U.S., however, are expected to rise in the long-term, according to a Bloomberg analysis.

A rise in the use of electric cars is likely to put a dent in the industry's ability to reach 2018's all-time sales record of an average of 392 million gallons of gasoline a day. 2022's average was 369 million gallons per day.

While gasoline consumption in the U.S. is declining, worldwide consumption is rising, which could mean bad news for Americans in what continues to be the world's largest market for gasoline.

According to Bloomberg, as the amount of oil refiners decreases following the drop in demand, the refiners that remain stand to make bigger margins from the sale of refined oil products.

Read also: GM Vs Tesla: How Do Q1 EV Sales Stack Up?

S&P's Global Oil Index, which follows the performance of 120 of the largest, publicly-traded companies engaged in oil and gas exploration, extraction and production, is down 0.7% on Friday.

ETFs in the crude oil sector were in the green on Friday.

• ProShares Ultra Bloomberg Crude Oil ETF UCO was up 2%.
• Invesco DB Oil Fund DBO  was up 1%

Big company stocks in the oil industry, however, were trading lower at the time of publication Friday.

• Chevron Corporation CVX was down 0.4%.
• BP plc BP was down 1%.
• Shell PLC SHEL was down 0.7%.
• Hess Corp. HES was down 0.5%.
• Marathon Petroleum Corp MPC was down 1.7%.
• Phillips 66 PSX was down 0.9%.

• Exxon Mobil Corp XOM was the exception to the group, up 0.5%, as investors anticipate the release of the company’s Q1 earnings next week.

Now Read: Clock Ticking: US To Begin Refilling Strategic Petroleum Reserve This Fall, Fueling Surge In Oil Prices

Photo: Unsplash