At a gas station outside New York City, retired probation officer Karen Stowe is confronted with a pump price she doesn’t want to pay. Instead, she bought groceries from a convenience store, planning to buy cheaper gasoline elsewhere.
“The prices are so high, people have to think very carefully about where they are going to drive,” said Stowe, who recently volunteered at a food stand. “People are in trouble, and it’s true.”
Although drivers in the US, Europe and elsewhere are resting gas prices are sky high they have endured throughout the summer, the cost is still hard for many who have struggled with non-stop inflation. The US average is $3.19 a gallon, down from a record $5 in Junewhile the European Union pump price has fallen by almost 40 cents, to $6.58 a gallon, since October.
Drivers now hope the situation doesn’t get worse after a series of cuts involving Russia’s war in Ukraineaccident and global economic slowdown strained the world’s oil supplies. While oil and gasoline prices have fallen despite recent supply shortages, those threats could ultimately push costs higher this winter.
What is the world facing?
– One EU bans imports of most of Russia’s oil went into effect last week.
— Simultaneously, the Group of Seven leading democracies and the 27 EU countries Russian crude oil price limit for other countries at $60 a barrel.
– Had one major leak along Keystone pipeline in the US, which has halted oil shipments along a major corridor.
– Dozens of oil tankers stuck in Turkey for days.
— The OPEC+ Alliance of Oil Producers has production cuts.
Claudio Galimberti, senior vice president of analytics at Rystad Energy, said: “The global system could withstand a few more days of these outages, but if they continue, they will play a role. important role in the price increase”.
One key reason oil supply constraints aren’t pushing prices higher: Traders expect less demand for oil in the future, due to fear that the global economy is entering a recession, which means less driving and production. And some investors are worried easing China’s COVID-19 restrictions can backfire on the national economy.
“It could quickly turn into a massive COVID wave that engulfed hospitals and would then have a worse impact on demand than the COVID policy,” said Galimberti.
Russian export restrictions will likely have a bigger impact on oil prices next month. Although Western countries have banned Russian oil, customers in India and China are buying it, so there is enough oil on the market for those who need it. Over 97% of Russia’s crude oil exports by sea go to China and India last month, according to Refinitiv, a provider of financial market data.
“We are not asking our companies to buy Russian oil. We ask them to buy oil,” Indian Foreign Minister Subrahmanyam Jaishankar told Parliament last week. “But it is a reasonable policy to go where we get the best deal for the sake of the people of India, and that’s exactly what we’re trying to do.”
In February, global oil supplies may be more limited as European countries will not be able to buy refined Russian products such as gasoline and diesel. Russia may cut oil production.
“So far, there has not been a major decline in Russian production. But once Russia is unable to export products to Europe, they will have to reduce production and that will lead to a shortage of supply, which will most likely be reflected in prices,” said Galimberti.
Russia may also decide not to produce oil due to the G-7 price cap. Its oil is being sold at a lower price now. But if prices rise and approach the ceiling, Russia may decide to take oil out of the market, analysts said.
“There is another shoe to skip on that front,” said Kevin Book, chief executive officer of Clearview Energy Partners.
White House press secretary Karine Jean-Pierre said the price ceiling would drive down Russian oil prices, especially at the $100 a barrel Russia earned just a few months ago.
“Our focus is on limiting Putin’s ability to profit from rising prices to finance his illegal war, while promoting global stability. energy market,” says Jean-Pierre. “This is not about Russian oil hitting the market. This is about the limit – this limit maintains a clear incentive for Russia to continue exporting and we believe it should.”
International benchmark Brent crude was selling for about $82 a barrel on Thursday. According to forecasts by the US Energy Information Administration, this number could increase to an average of $ 92 per barrel next year. That’s still under $125 seen this summer.
When it comes to prices at pumps, they’re lower than they were last year, but Americans have paid between $2 and $3 per gallon for most of the past decade, according to AAA data.
In the EU, where taxes account for a larger share of the cost of petrol, prices fell to 1.70 euros per liter ($6.58 per gallon) in the first week of December from 1.80 euros per liter ( $6.96/gallon) at the end of October, according to figures from the bloc’s Executive Committee.
Recent price drops coupled with cold weather have left 28-year-old Aria Razdar behind the wheel of her BMW hatchback in Frankfurt, Germany. In the summer when prices go up, he rides a Vespa scooter to work and school, but gas prices drop and so does the temperature.
“Right now, the prices are a bit more reasonable – they are still high, actually, but by comparison,” said Razdar, a childcare worker studying to be a teacher, as he finished pumping the fuel. in an icy wind.
He spent a little under 30 euros ($32) on gas for the week, an expense he says he can manage to make it convenient to drive 12 minutes to work instead of spending 45 minutes on public transport.
Others also want lower prices.
Gary Schwuchow, a retired maintenance supervisor, says he’s less on the road and saves money because he lives off his pension and Social Security payments.
“I used to be able to fill up my gas tank for $40 or $42, and now it’s almost $60,” he lamented as he filled up. NISSAN Sentra at a station in Yonkers, New York, where a gallon of regular gasoline sells for $3.79. “I don’t fill anymore. I put $25 at a time.”