for more on this. It's bringing robert Sinclair spokesman
from Triple A robert gas prices have fallen for almost
two months straight now approaching$4 a gallon, which
compared to recent highs, that seems like a nice
decline. But I can vividly remember when I was
talking about a year or so ago at gasping$3.04
at a high. So relative to that is,
it is nowhere near where we were. Nonetheless,
is their sentiment that this decline potentially has more room
to run As I cross my fingers that you're going
to say yes, it certainly could. And it
has to do with the price of crude oil which
continues to go down. We have peaked at 1
22 11 back on june 8th and we're just over
$90 a barrel now. But it's bad news that's
sending the price of crude oil. Lower traders are
worried about global inflation and less demand for petroleum products
so they're kind of heading for the exits and looking
for other investments and driving is down, drivers just
don't have the elasticity in their budgets to deal with
the high prices that we have been seeing and demand
is down roughly 8% compared to a year ago.
So we're burning about 25 million gallons less per day
compared to where we were say a year ago and
that's leading the things to go down now. We
are in the summer driving season, usually at the
end of the summer driving season, we see less
demand with kids going back to school and parents going
back to work, no more vacations. But it
could be that we've already seen that drop because of
the higher prices. So it's gonna be kind of
wait and see on that particular part of the demand
story and the gas price and crude oil story that
being said then we're only a few weeks a few
weeks out from the all busy kind of Labor Day
weekend. Right, What are you expecting to see
this Labor day? We love triple A when they
give us the projections of the actual number of people
who have taken to the road and then what gas
prices are then it will be very interesting to see
what those projections tell us for a labor day.
I have a feeling that we might be flat compared
to last year. People are still very eager to
go out and do something after being cooped up for
the past couple of years. But given the demand
lower demand numbers that we're already seeing, it's,
it's really hard to predict. So we have to
stay tuned. Well, stay tuned And I think
I'm so far planning a road trip. It'd be
nice if those gas prices come down a little bit
to make that road trip. Um, not be
as painful at the pump. Can you break down
though? And you, you touched on this a
little bit a few moments ago in terms of why
we're seeing gas prices decline because it doesn't seem like
it's because there is higher supply now and demand is
there and supply is able to kind of, you
know, take care of demand and thus the price
come down. It does actually seem like it's a
factor of people feeling the pinch and then and then
pulling back without a doubt that's the case. You
know, we did a driver's survey back in March
, we asked drivers what the pain point was for
the price of gasoline and 60% said$4 a gallon
, 75% said$5 a gallon. So we are
still in that range. And so I think that's
why we are seeing a manifestation of the responses to
that survey with drivers driving less. They're not eating
out as much, they're cutting back on major purchases
like a big appliance. But I have to hearken
back to March of 2018 when we had the same
survey and 40% of drivers then during a good economy
said that$3 a gallon was the pain point where
they'd have to cut back on, on various expenses
and you know, it's that core 40%. And
if it's$3 a gallon back then in 2018 during
a good economy, I can imagine that price might
be even lower now, maybe 2 50 a gallon
, that's the pain point. So We're at over
$4, you know, getting close to$4 a
gallon right now, but I don't think it's time
to break out champagne just yet because a significant number
of drivers would still be suffering even if we got
down to$3 a gallon. Yeah. To your
point there, that's what I was saying earlier.
I vividly remember when I was put on my anchor
voice, it was like$3.04 a gallon at a
high and now we would love, we would celebrate
$3.04 you know, as a high for for gas
. Right now, that being said, I'm sorry
. It's just going to say you might see prices
near that range if you head down south because there
are actually 20 states in the$3 per gallon range
and they are mostly in the south and the midwest
. The cheapest gasoline to be had is in texas
. And that corresponds with the fact that a lot
of the oil and gas infrastructure is there in the
gulf coast, in texas, Louisiana, Mississippi and
Alabama. So you're sort of closer to the source
of the product and that cuts down on distribution prices
. So if you're gonna take that road trip at
least to head south, it'll be cheaper apparently.
So just getting from here to the kind of the
border where some of that oil is cheaper. In
the meantime we do know that the world, the
world's oil exporting countries. Opec obviously have agreed to
a small increase in oil output next month. Do
you expect with that supply side increase? that to
have any real impact on gas prices Small is the
operative word, the an extra 640,000 barrels per day
for this month and an extra 100,000 barrels per day
for next month. The OPEC plus has announced,
consider that global consumption is 100 million barrels per day
. And we were talking about less than 1%.
Now there might be a positive psychological effect or,
or negative if you're an investor where investors start to
say, well there's gonna be more oil and gasoline
on the market that's going to drop the price.
So I'll head for the exits and find other investments
and that might make the price of crude drop even
more. But in terms of, you know,
real market influences, it's not that big a deal
. But the oil and gasoline market is extremely fickle
something real. Or even imagine just the threat of
something happening can lead to significant price changes as far
as crude oil is concerned. And with the retail
gasoline prices, so we have to watch the market
very carefully. I mean by the end of this
conversation, something could happen that could radically affect gasoline
prices and crude oil prices. Um, and also
we've got the big X factor of hurricanes, uh
, for major Katrina or rita type event from 2005
were to hit the gulf coast. Uh, we
could see prices go places we have never seen before
To that point of the potential of something that could
happen. There's a lot of chatter about whether we're
in a recession and whether or not we go into
a more robust recession, like, like some economists
are actually predicting what could that the impact of that
beyond gas prices. Do you think we'll see anything
similar to what we saw in 08 or even at
the beginning of the pandemic? Well, you remember
oh eight, we began 08 with the highest gas
prices that we had ever seen at$4 a gallon
. And when the recession hit, prices fell substantially
by the end of the year and during the pandemic
, we actually saw negative prices or in crude oil
on april 20th 2020 when I believe it was negative
$37 a barrel. Um, I don't think things
will get that bad even with a significant recession,
but if that recession comes with lower employment, um
with fewer folks working and less economic activity than we
could see lower prices when the economy is good,
people are driving to work, construction is happening,
vehicles are heading across the country, Burning more fuel
and that leads prices to go higher. The economy
is bad, they go lower. So what do
you want? Bad economy with lower prices or a
good economy of higher prices, but really quickly,
I probably got only 30 seconds here, but the
reality is, is higher gas prices are impacting,
you know, price hikes as they start to come
down. Is that a good, you know,
a good thing for the inflation print since the reality
is, that's probably the most volatile component of inflation
right now. It is. But I think what
you need to really be watching is the price of
diesel because it's going to be a diesel burning truck
, that's easing the supply chain problems that we're having
and diesel is still 5 21 per gallon and the
average truck holds 300 gallons. So at 5 21
per gallon, that's more than$1500 to fill up
that truck compared to a year ago when I was
3 29 a gallon and would have cost you$987
to fill up that truck. So that extra expense
, as far as diesel and the trucks delivering those
supplies that we need get passed on to consumers and
I think that's one of the main drivers. If
I can use that pun in inflation these days,
So watch the price of diesel, that's going to
make a big difference. It has fallen but not
fallen enough certainly to make a dent on inflation,
robert really appreciate your time and your insight, robert
, Sinclair spokesperson from Triple AA