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Expert says don't get too comfortable with lower gas prices

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Posted at 3:04 PM, Jul 19, 2022
and last updated 2022-07-20 05:36:02-04

TAMPA, Fla. — Daniel Behrendt said when he bought his truck 18 months ago it cost him about $40 to fill up.

Now it’s about $80.

“It’s breaking the bank. It literally is. It’s affecting my business because people don’t want to remodel their homes because prices are too high. Everything is too high,” Behrendt said.

There is some relief with gas prices dropping the last five weeks.

Tom Kloza is the global head of energy analysis for Oil Price Information Service known as OPIS.

He said one in five gas stations is now charging less than $4 a gallon.

“The psychology of having, probably in Florida it’s close to 20%, prices with the three handle. all be it $3.999. I think that helps. And that means that people will drive a little bit more. Or if they had a trip on the shelf, they might take that trip.”

According to AAA, the national average is trending down, now at $4.49 a gallon.

But Kloza said the falling prices won’t last as we head into hurricane season and he expects the national average to go back above $5.

“It’s really sounding like we shouldn’t get too comfortable,” he said.

“I would not get too comfortable. In the last few weeks, I think the futures markets, the big global oil markets, have basically priced in a recession. All be it may be a mild recession. And I think they haven’t priced in a hurricane impact. Let alone a hurricane probability cone in the Gulf of Mexico. And they certainly haven’t priced in what Vladimir Putin is capable of or hot temperatures are capable of,” said Kloza.

While regular gas prices have dropped, diesel fuel has not.

Kloza said it’s because of low inventory, higher global population, and limited refinery capabilities.

Whatever the reason, rising costs are taking a toll.

“With the inflation of everything in general at the moment I feel like there’s nobody that isn’t struggling,” said Joshua Woodard.

“My takeaway would be, be careful we are not out of this yet. The coast is not clear. And there are all sorts of things that can happen,” said Kloza.