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Gas prices are tanking in Texas. But will it last?

Posted by: tdt -

Gas prices are tanking in Texas. But will it last?

By Jake C. Piazza
The Dallas Morning News

Texans, you can exhale the next time you’re filling up at the gas station. At least for now.

Gas prices across the state have fallen 16 cents over the last week, the largest weekly drop in Texas this year. There’s a good chance the downward trend continues into the coming weeks, giving drivers a slight reprieve after the average price of gas statewide topped out at $4.70 a gallon on June 15.

The average price in Texas now is $4.33, according to AAA, and some gas stations in Dallas- Fort Worth, such as Costco, Sam’s Club, Murphy USA and Walmart, are already below $4 per gallon. Outside the region, Laredo in South Texas is already averaging less than $4 and other parts of the state are close, too.

Despite the appeal of cheaper gas, the drop doesn’t mean inflation is under control. Part of the reason for the decline is an increase in regional supply of gas and recession fears driving down crude oil prices.

The past six days are what OPIS global head of energy analysis Tom Kloza called “recession sessions.” AAA Texas spokesman Daniel Armbruster and GasBuddy oil analyst Patrick De Haan agree with Kloza.

Armbruster said the possibility of Texas seeing a $5 per gallon average is dwindling, but there is no guarantee that prices don’t jump back up “for at least a short period of time.”

“But we can’t guarantee that prices won’t go back up for at least a short period of time.”

None of the analysts are ready to say this dip means gas prices will stabilize at a lower price. The Russia- Ukraine War, historical travel trends in July and the looming hurricane season make it difficult to predict. “This is an interlude rather than a real trend change,” Kloza said, adding that he expects the slide to last until mid-July.

De Haan also anticipates another week or two of decrease, but all three analysts describe volatility in the Russia-Ukraine war as a wildcard that could send prices soaring again. On top of that, peak hurricane season is approaching in the Gulf of Mexico. Storms and hurricanes can force refineries in the Houston area to shut down, resulting in a supply squeeze that could drive prices back up.

For now, the supply of gas has clawed its way back to being closer in line with demand. Armbruster credits the White House’s move to tap into the Strategic Petroleum Reserve, and Kloza pointed out that profit margins in the oil industry are still huge, even with the price drop. He expects West Texas to up its oil output because of that.

“The big question is will the supply keep up with demand,” Armbruster said. “Right now, it’s starting to and that’s one of the reasons why we’re seeing prices drop.”

Demand spiked prior to the July 4th weekend, with the domestic product supplied jumping to 9.4 million barrels per day from 8.9 million in the week before, according to the Energy Information Administration’s Thursday report that included data up to July 1. Armbruster said July is historically the most popular month for road trips.

The only concrete answer for consumers is that future gas prices could be heavily influenced by geopolitical factors and weather.

“When it comes to oil, nothing is a permanent trend,” De Haan said.

So save some money while you can.

©2022 The Dallas Morning News.

Distributed by Tribune Content Agency, LLC.

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