‘Oil Prices Rise and Gas Prices are Following’ says Analyst
Analyst for Gas Buddy Patrick DeHaan has been in great demand recently since oil prices began their dramatic rise in the last few weeks.
DeHaan provided the latest numbers for oil and gas prices.
“The rise in oil prices is leading to higher gas prices unfortunately, diesel prices and most likely higher airfares,” said DeHaan. Everything continues to go up in terms of oil prices, as you mentioned oil reaching a new high since 2018 at about $72 a barrel. This all comes as the economy continues to recover amidst improvement in the pandemic and Americans hit the road for the summer driving season.”
DeHaan said even with all the news about the Keystone XL Pipeline and other pipelines, the oil industry is in no condition to drill new wells after the pandemic.
“Because of COVID last year, oil companies don't even necessarily have the money to look at or buy new permits,” he said. “Oil production pre-pandemic was 13 point 3 million barrels a day. It's nowhere near that right now. It’s only about 11 million barrels a day, and all of that capacity could come back online but oil companies lack the labor and manpower right now to bring it online.”
DeHaan said the rise in prices across the board has little to do with higher oil prices.
“I think most Americans are blaming oil prices for the rising price of groceries, but all commodities are seeing a surge in value simply because there's so much money running out in the economy right now,” he said. “There’s also government stimulus, which is injecting money into the economy, so just about everything is seeing a big jump in price, not just oil, but the price of corn, the price of lumber, the price of wheat, other agricultural commodities, all are rallying.”
DeHaan said gas prices will continue to rise, but will peak in late summer.
“I really don't foresee a situation where gas prices would rise by more than say 25 cents a gallon from where they are today,” he said. “So we should be pretty close to the end, though increases are likely through maybe July or early August. We should start to see relief after that and I don't expect anyone to see record gas prices this summer.”
DeHaan asked listeners to remember back to 2008 when the price of oil skyrocketed to nearly $180 per barrel.