Gas prices are rising again
The average price for a gallon of gasoline is now 3.57 and rose by 8.8 cents compared to a week ago, according to GasBuddy.
While still cheaper than last year the rise of gasoline prices could continue as demand stays strong and OPEC cuts start to bite. WTI is back above $83 a barrel after falling to a low of 65.17 in mid-March.
The supply issue is still here as oil producers have made limited investments since the pandemic. You don’t solve oil prices with no new supply or reduce refining capacity.
The fall of oil in the last 9 months has been more about SPR drawdowns and speculation versus actual supply and demand dynamics. OPEC was keen to point out that oil trading has been manipulated by traders to bring the price down. Now they aren’t going to play ball anymore.
China’s reopening is still ongoing. Unless a recession hits, we aren’t going to see lower prices. And if and when the Fed cuts, the dollar will weaken and maintain higher prices while the US government will have to come back and rebuild their SPR levels.
We haven’t fixed inflation. Stagflation probabilities are growing not receding. This isn’t about the Fed anymore. We have structural issues and those aren’t getting fixed anytime soon.
