NJ Gas Prices Keep Dropping: How Low Will They Go?
Gas prices continue to slowly drop in New Jersey. They’re down around 50 cents over the past five weeks, but will the trend continue, and if so, for how long?
According to Tom Kloza, the global head of energy analysis for the Oil Price Information Service, demand for gasoline has dropped much more than expected, in part because of fears about an economic slowdown, but prices will probably start to rise again in a few weeks.
“I think we’re in a reprieve or an interlude, but not necessarily a trend change,” he said. “My advice would be to enjoy these prices. They may continue to go lower for the next 10 days or so, but I think there’s still another move higher.”
He said for the rest of July, gas prices will slowly continue to drop, down to “something between $4.25 and $4.50, but I think it will turn and there’s potential for all sorts of numbers with hurricane season.”
Why will prices at the pump start to go back up?
“It’s going to be prompted by supply worries, refinery maintenance, some refinery downtime, perhaps because of power grid issues, and then the specter of hurricane season,” he said.
He predicted even if we don’t have any hurricane issues “we’re going to see prices tend to move up from let’s say the last week in July through August.”
He also stressed trying to figure out what will happen with gas prices right now is very tricky.
So much uncertainty
Kloza pointed out it’s possible the price of gas will drop a little more then stay lower but “we’ve got a gauntlet of different issues to deal with including Vladimir Putin, power grid issues and certainly including hurricane issues so my base case is we’ll see prices rise.”
When asked how high gas prices might go over the next six weeks if there are no significant storms in the Gulf of Mexico he said back up to $5 a gallon or perhaps a bit higher.
Hurricanes and Russia pose big threats to gas prices
But if there are big storms that interrupt refinery production or if there’s a crazy twist involving Russian oil, Kloza said prices at the pump could shoot a lot higher, possibly up into the $7 a gallon range.
“I think it could happen in the next 6 months. I mean, don’t misunderstand the threat of Russia,” he said.
As for what will happen long-term, he said a price drop back down into the $3 a gallon range is certainly a possibility but “I don’t predict it certainly for the next 6 months and perhaps maybe the next 18 months.”