How Geopolitical Tensions Could Impact Your Summer Travel Costs

Recent data from AAA shows a modest decline in the national average price of regular gasoline, now at $3.46 per gallon, compared to $3.62 last month and $3.59 a year ago. This trend suggests a cooling off from previous highs, yet experts foresee a fluctuating market throughout the summer season.
Patrick de Haan, the head of petroleum analysis at GasBuddy, anticipates that gas prices will predominantly range from $3.25 to $3.75 per gallon during the summer, aligning with earlier forecasts. Despite the current stability, de Haan cautions that unforeseen events could potentially push prices higher. Contributing to the outlook of stable prices, Andy Lipow of Lipow Oil Associates notes that gasoline inventories have increased by approximately 5% from last year, with refineries operating at around 95% capacity. This robust production rate suggests sufficient supplies for the summer driving season. However, Lipow and other experts, including Phil Flynn of Price Futures Group, warn that prices remain susceptible to external shocks, such as geopolitical tensions or hurricanes affecting Gulf Coast refinery operations.
Flynn also highlights the lack of surplus U.S. oil supplies as a vulnerability, emphasizing that any disruption could significantly impact market stability. Moreover, he points out that declining consumer prices could boost travel enthusiasm, potentially driving gasoline demand and prices up, especially around the Fourth of July. Additionally, the decision by OPEC Plus to maintain reduced oil production could further influence gasoline prices by countering recent downward trends.
As summer approaches, Lipow projects a slight increase in gas prices, estimating the national average to be between $3.50 and $3.55 per gallon around the Fourth of July.
Key Takeaways:
The national average gas price has slightly decreased but is expected to remain volatile, ranging between $3.25 and $3.75.
Gasoline supplies appear stable due to high refinery utilization and increased inventory levels, yet remain at the mercy of unpredictable geopolitical and environmental factors.
External factors like OPEC Plus policies and national holidays such as the Fourth of July are likely to influence fuel prices significantly.
Conclusion:
This summer, while gasoline prices are currently showing a slight retreat from their recent peaks, multiple factors including geopolitical risks, seasonal demand spikes, and strategic oil production cuts could drive prices back up. Consumers and industry stakeholders should stay informed and be prepared for potential volatility in the fuel markets.