The relief in gas prices seen in the latter half of June may prove to be short-lived.
“The way that decline potentially continues is if we see a drop off in demand,” CIBC Senior Energy Trader Rebecca Babin said on Yahoo Finance Live. “I would note that the prices at the pump have come off by maybe 2% to 3% whereas the prices of commodities have come off 10% to 15% [off their highs]. So it hasn’t been an equal relationship there. Unfortunately, I don’t think we are going to see this gap lowering prices at the pump because demand has remained pretty resilient and we have China starting to reopen.”
Consumers are finally seeing some pressure taken off their wallets when making their stop at the local gas pump. The average price of regular unleaded gasoline dropped for the second straight week last week, according to new data from GasBuddy, which found that gas prices dropped almost $0.09 from the prior week.
The current average price of regular gasoline in the country is $4.91 a gallon, down from an all-time high of $5.03 a gallon on June 3.
Still, motorists are continuing to pay through the roof to fill up the tank compared to prior periods.
The national average price for regular unleaded gas is up $0.28 in the past month alone, and $1.79 a gallon higher than one year ago. Diesel prices are still hovering around $6.00 a gallon on average nationwide.
According to forecasts by GasBuddy, gas prices could drop by $0.20 a gallon ahead of the July 4 holiday, and then head higher as people embark on summer vacations.
Babin is also predicting similar trends, stating that prices will be back on the rise amid tight refining capacity in the oil industry.
“I just don’t think that we have the refining capacity to put enough product on the market to really cause a massive sell-off,” she said. “Can we dip a little bit? Sure. Is it going to be enough to kind of get us back to $4.50 a gallon? I don’t think so.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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