Mark's Message - 08/30/22
If you’re planning a road trip this Labor Day weekend, there’s good news and bad news.

The good news is gas prices will be a lot lower than they were earlier this summer. The bad news: They’ll still be painfully high. Real relief at the gas pump is probably still a ways off. The national average price of regular unleaded is $3.85 per gallon today, according to AAA.
It has dropped about 40 cents over the past month due to lower demand and cheaper crude oil. However, today’s price is still 70 cents higher than a year ago on this date. And it looks like the steep decline in gas prices this summer has started to level off in recent days. Oil prices have stopped dropping, and even ticked a bit higher. That may feed through to the retail level as a slight uptick in gas prices, especially if travel during the holiday weekend is heavy. If you’re hoping for gas prices to get closer to $3 per gallon, you’ll probably need to wait until well into the autumn, when demand for fuel will be lower and oil may also be cheaper.
Speaking of oil, it has stabilized in recent days after dropping for much of the summer. Benchmark West Texas Intermediate is trading near $94 per barrel, up slightly from last week. Comments from OPEC about possibly reducing oil exports because of the slowing global economy caused traders to bid up oil prices, which had recently dipped below $90. Even if OPEC does scale back exports a bit, we look for oil prices to trend lower this autumn because of slowing economic growth, or even outright recession in Europe, which is suffering an energy crunch due to reduced supplies of Russian natural gas.
The gas shortage in Europe is driving up natural gas prices here in the United States, too, as producers ship as much liquefied natural gas to European buyers as they can. The benchmark gas futures contract is trading near $9.20 per million British thermal units, which is close to the highest level in 14 years. However, it’s just a fraction of what gas costs in Europe now, which is why it’s so attractive to export relatively cheap American gas across the Atlantic. We look for natural gas prices to continue trending higher as cooler weather arrives this fall. High demand from Europe isn’t going away, and U.S. stockpiles of gas in storage are already somewhat low for this time of year. That means American households can look forward to hefty heating bills this winter, as gas and other fuels cost more.
Courtesy of Kiplinger’s weekly newsletter.
https://www.kiplinger.com/economic-forecasts/energy
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