GasBuddy Head of Petroleum Analysis Patrick De Haan joins Yahoo Finance Live to discuss the latest moves in the energy market and what this could mean for consumers.
- Today marks 63 straight days of falling gas prices. The national average, according to AAA, $3.95. That's down $0.60 in a month, but still $0.75 a gallon higher than it was a year ago. GasBuddy head of petroleum analysis Patrick De Haan joining us now. Patrick, you say the streak is actually over, that prices have in fact leveled out. What are you seeing?
PATRICK DE HAAN: That's right. Well, we saw wholesale prices last week take a big jump up. In the Great Lakes, wholesale gas prices jumped over $0.45 a gallon. That led to an increase yesterday in some of those Great Lakes states like Indiana and Ohio. That was enough of an increase to stop the decline. Prices yesterday went from $2.92 to-- excuse me-- $3.92 to $3.93 a gallon, thus rising a penny and upending that streak.
But the good news may not be over. Oil prices started the week tanking again on concerns over China's economy and a potential new nuclear deal with Iran, something we've heard countless times. Oil prices dropping and could continue to see gas prices falling across the country, at least for now. Although, I think the West and East Coast may see falling prices more than other areas.
- So Patrick, we're on the East Coast. Give us a better sense, I guess, of how big of a further drop we could potentially see over the next couple of weeks.
PATRICK DE HAAN: Well, subject to Mother Nature, of course. We're in the midst of hurricane season. There's also unexpected issues that could arise out of that. So kind of with the caveat that hurricane season could interrupt any decline, I think the East Coast could see price is still moderating $0.10 to $0.20, along with the West Coast and areas of the Rockies. Those are areas that have seen refinery issues or tight supply. Those have been improving, at least for now.
Keep an eye on demand, though. It's starting to drop seasonally. Although, I think the gap between this year and last year is going to start to narrow because of the large drop in prices. Now, the national average finally starting with the same digit, the $3 candle, that we did a year ago. So that may entice some Americans to at least hit the road to close up the summer driving season.
- Patrick, you mentioned demand there. How significant has the drop been in recent weeks?
PATRICK DE HAAN: Well, it's a little bit here and there. According to GasBuddy data, gasoline consumption last week fell by 1.6 percentage points compared to the prior week. Gasoline demand usually peaks in late July. This appears to be the case this year. So 1.6% drop as schools start to reopen. That's expected. But what I'm referring to-- I think we'll start to see the gap between this year's demand and last year's demand narrow because of the tremendous decline in prices over the last nine weeks.
- Hey, Patrick, in what states-- I know you guys closely track the state by state prices. Where are we seeing the biggest bargain, if you could call it that, right now for a gallon of gas?
PATRICK DE HAAN: Well, believe it or not, there are still some stations that are sub-$3 a gallon. Now, those are few and far between. But when it comes to having the lowest prices, Texas continues to lead the nation. Average price in Texas, about $3.42 a gallon. Other areas in the South not far behind. Arkansas, Oklahoma, South Carolina, Tennessee, Mississippi, Georgia all areas where prices are under $3.50 a gallon. Conversely, California and Hawaii still the only states above the $5 a gallon mark, with California at $5.32 a gallon for a statewide average.
- It's really all relative like real estate. I'm still filling up $100 SUV. And it hurts. It doesn't feel like 60 days of falling prices. You mentioned the price of oil. WTI and Brent falling 3%. What's the X factor there? And do you see them flattening out?
PATRICK DE HAAN: Well, there's a lot of volatility at the high level. Keep in mind demand is still strong, though it may be declining seasonally. And there's a lot of high-level headlines that could influence oil in the days ahead, including economic data. We're talking about a possible slowdown in China. But last week, we saw a very good jobs report in the US. So conflicting data there. And also, the continued possibility of Iran making a new nuclear deal. That's still not clear yet whether or not we'll see that. And I think we're on the 40th possible day that that would happen. That could ultimately undermine the price of oil if there is a new nuclear deal with Iran.
- And Patrick, we also had the SPR winding down in October. The EU embargo on Russian oil imports in December. I guess, how do you see that playing out? And how big of an impact do you see that being for the price of crude here in the US?
PATRICK DE HAAN: Well, I certainly think crude could be challenged going into the last quarter of the year. Though keep in mind as US demand is starting to moderate, that may provide a little bit of breathing room. Now, when it comes to diesel, keep in mind much of the EU consumes diesel as its primary transportation fuel. Diesel, also the same as heating oil and with winter around the corner, I think diesel is going to remain pretty lofty compared to gasoline. It's going to be the more desired hydrocarbon.
I do continue to see oil prices under pressure this winter. But with an economic slowdown possibly still brewing, there could be some relief in the price of oil. If we do see a slowdown, that could limit consumption and give us just enough spare capacity to make it through winter.