SHOPSMART AUTOS – AUGUST 16, 2021 – Pain At The Pump Gas Prices

Written by admin on August 16, 2021. Posted in Audi, Car Specials, Chevrolet, Dodge, Electric Vehicles, Honda, Hyundai, Mercedes-Benz, Nissan, SUV

The price for a barrel of West Texas Intermediate crude oil tested the $70 level on Friday before closing at $69.62. While that is good news for oil producers around the country, it is not good news for vacationers getting ready to take to America’s roads with their families this summer. But here’s the worse news for you travelers: The price at the pump isn’t likely to go anywhere but up from here. Here’s why:

While crude prices seem high already, the current dynamics in global supply and demand favor them moving higher still. Global demand is recovering so rapidly that the International Energy Agency was forced to revise its pessimistic forecastthat crude demand wouldn’t return to pre-pandemic levels until 2023 ahead to the fourth quarter of this year.
The deal among the OPEC+ nations this past week to continue the group’s plans to gradually raise its oil exports to keep pace with demand recovery helps to protect against a return of any global glut of supply.
The U.S. shale industry continues to amaze many observers – myself included – by exercising a rare level of discipline in its drilling efforts, as both the Enverusand Baker Hughes BHI +1.5% counts of active rigs appear to have peaked in late April and have remained essentially static since then. With the number of active rigs still sitting at a fraction of their pre-pandemic levels, the U.S. industry appears determined to avoid another replay of the drilling frenzies that have led to supply gluts and price collapses in the past.

All of these factors and more have analysts at Goldman Sachs sticking with their projection for $80 per gallon Brent prices by late summer. Brent, the prevailing international oil price index, closed Friday at $71.89, so a rise to $80 per gallon would represent more than a 10% increase. Many elements go into the price for gasoline at the pump, but as a general rule, those retail gas prices do move up and down in a direct relationship with the price of crude oil, from which the gasoline is of course refined. Thus, if Goldman is right and the Brent price does see a 10% increase over the next couple of months, we can reasonably expect the price for gasoline at the pump to rise as well. Make It A Champion Day!

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SHOPSMART AUTOS – AUGUST 16, 2021 – Pain At The Pump Gas Prices

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