With gasoline prices so high, it was only a matter of time before we would see a drop in demand around the world. Whenever possible, many people reduce their trips.
The Autoblog site published an interesting article on the subject on Friday. Here is a summary of what has been brought forward.
Yahoo Finance Group spoke to several strategists to get their take on when demand might start to drop.
“You could say that the annihilation of demand for gasoline has already begun,” said Peter McNally, global head of industries, materials and energy at Third Bridge (a web development company that provides digital and cross-platform software). “Since early March, gas mileage in the United States is down 6% compared to the same period in 2019.”
At our neighbors, the national average flirts with $5 a gallon. In California, in the Los Angeles area, the $8 milestone was reached and exceeded. And we mentioned it last week, we’re approaching $3 a liter (in Canadian currency) in England.
The US Energy Information Administration (EIA) also saw a slight decline in gasoline demand compared to 2021.
Check out vehicles for sale near you
The price increase at the pump is related to the increase in the price of crude oil. The problem is compounded by the limited number of refineries.
And the problem, as you and we know, is that consumers aren’t just paying more at the pump. High energy prices affect the cost of virtually all commodities, including groceries.
The big fear is that rising energy prices will contribute to an economic slowdown. The effects are already being felt. The word “recession” is being used more and more.
And to this reality must be added the effects of the Russian war in Ukraine. The sanctions imposed by the West on Moscow pushed Brent oil prices briefly above $130 a barrel last March. Many people would like the conflict to be resolved quickly so that the pressure to lower prices eases a bit.
If you take the time to read various analysts’ opinions on what to do next with prices or the possibility of a recession, opinions will differ. In fact, there is a sense of uncertainty, especially since nobody seems to know what will happen in the next few months.
On one thing, however, there seems to be a consensus that gas prices could rise again before they fall. Analysts at JPMorgan recently predicted that the national average in the United States could reach $6 a gallon and be even higher by August.
In our country, the figure of $3 per liter has been suggested by some. Sounds unreal… like a prediction of $2 a liter 6 months ago would have been. The hope may lie in a serious fall in demand (remember what happened at the start of the pandemic). According to the EIA, demand in the last four weeks is around 2% lower than last year at this time. And as prices rise, demand will continue to fall, eventually driving prices down.
A beautiful spiral. In the meantime, many of us are rethinking our travels for the upcoming summer.