Petroleum Analyst: Cheap Gas Soon to Run Out
Photo: Mike Mozart via CC
The past year of automotive sales has been marked by the effects of one of the main driving forces in cars: gas prices. As prices have remained low since Iran returned to the global oil market, larger and larger vehicles have become more popular, driving SUV sales through the roof.
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However, according to GasBuddy.com’s senior petroleum analyst Patrick DeHaan, that may soon be turning around.
Prices for crude oil have actually been rising recently, as the Organization of Petroleum Exporting Countries (OPEC) agreed to a production limitation, slashing sales by 1.2 million barrels per day, even getting Russia to agree to a smaller cut at 300,000 barrels.
However, DeHaan points out that current low prices are more due to seasonal effects, particularly in California, with the snow and rain of the winter season keeping people off the road, and subsequently, out of the gas stations. Warmer weather and spring gas price reformulations could drive the prices back up.
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“Once Valentine’s Day is over, buckle up,” he said. “Good ol’ supply-and-demand will take back over.”
Rising gas prices might lead to a reversal of the current trend of large vehicle sales. In a time when emissions regulations are imperiled by the incoming administration, rising gas prices might be a point of hope for environmentally-friendly vehicles. Interestingly, that might make regulations driving up vehicle efficiency the friend of the larger vehicle—if they get efficient enough, consumers may still go for SUVs.
News Source: USA Today
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