Gas prices should stabilize heading into summer, says analyst
Better fuel-efficiency standards mean North Americans can drive further on less fuel
Gas prices should start to stabilize across the country as a glut of crude oil production outpaces demand, according to experts from Gasbuddy.com
The fuel price tracking firm says there could be a slight increase in prices at the pump over the next two weeks as speculation continues over the possibility of more crude oil production cuts, but the prices should eventually even out.
- OPEC set to prolong oil output cuts by nine months
- Gas prices jump across country due to weak loonie, warmer weather
"I think we're looking at the potential for a slight increase in prices between now and the first week of June," said Dan McTeague, senior petroleum analyst for Gasbuddy.com. "Most of that is based on speculative hype."
The Organization of the Petroleum Exporting Countries — an international group that regulates global oil production — is likely to extend production cuts for another nine months. Ministers and delegates from OPEC meet this week to hash out strategies to speed up market rebalancing and prevent oil prices from sliding back below $50 per barrel.
There are other reasons why fuel prices could stabilize, explained McTeague, including U.S. refineries that have been churning out gasoline in record amounts as they anticipated the fourth straight year of record demand.
But the fuel pricing expert said soon that demand might not be there thanks to new fuel-efficiency standards for North American automobiles are allowing drivers to go further for less.
"I think the reality will start to sink in very quickly that, in order to deplete those large inventories of gasoline ... as a result of better fuel efficiency as well as over production, they're going to have to drop prices," McTeague said.