Mike Wirth has bad news for consumers. Those eye-watering prices you see at the gas station? They may go higher.
The Chevron CEO believes crude oil prices, currently at $95 a barrel, will reach $100 and rise further.
“It does look like [$100 a barrel is going to happen]”, Voss told Bloomberg TV. “We are certainly heading in that direction. Supply is tightening, inventories are dwindling, these things happen gradually – you can see it increasing. “
However, while Voss said consumers are “close” to seeing fuel prices hit the $100-a-barrel threshold and trends suggest prices will only continue to rise, he and other economic experts believe consumers will be able to handle the pressure.
Why are natural gas prices so high?
Oil prices, as well as gasoline and diesel prices, are rising due to political tensions and geopolitical factors.
In April, some members of the Organization of the Petroleum Exporting Countries (OPEC) – including the United Arab Emirates, Kuwait, Oman, Algeria and Kazakhstan – announced they would begin curbing production, cutting production by about 1.15 million barrels per day in an effort to reduce oil output. Stabilize the market.
Meanwhile, another oil-rich country, Russia, although not an OPEC member, has said it will not sell its products directly or indirectly to the United States because of the latter’s price caps on the commodity following Russia’s invasion of Ukraine. The retaliation will not cause further damage to oil prices, as President Joe Biden has banned Russian oil imports into the United States, which has caused prices to surge.
On top of deadly flooding in another OPEC country, Libya, this month could further disrupt oil supplies in the country, which OPEC says typically produces about 1 million barrels a day.
Will natural gas always be this expensive?
Experts predict that prices will ease in the future.
Voss said the current highs suggest the market is not yet mid-cycle, adding that these trends have not prompted Chevron, the second-largest U.S. oil company, to change its long-term price forecast for oil.
“We really haven’t changed [our long term price] A lot of times,” Voss explained. “We’ve been in a volatile market, actually dating back to the pandemic, when things were down, when the economy was recovering, when the economy was up, and when the war was going on. This is a time when prices are unpredictable and volatile. ”
The U.S. Energy Information Administration has better news: Although average prices are expected to rise in the fourth quarter of 2023, they will fall back in the second quarter of 2024.
It explained that Brent crude could average $93 a barrel in the final months of the year (a scenario supported by falling global oil inventories) before falling back to $93 a barrel by mid-2024 as oil inventories rise again. US$87 per barrel.
Will rising oil prices affect the economy?
Despite its fierce warnings, the Fed has taken pains to roll out measures to reduce inflation, surprising even its critics.
Viewers have reason to worry that this work could be undermined simply by the price of natural gas—after all, more than half of the increase in the consumer price index in August was attributed to oil.
But Voss expressed confidence in U.S. consumers, saying the $100-per-barrel price was higher than “our long-term projections.”
“I think there will be some economic impact, but for most of this year and certainly all of last year, we had relatively high oil prices,” he said. “The recession that everyone is talking about is not here yet, so I think the underlying drivers of the U.S. and global economy are still pretty healthy.
“I think it’s a drag on the economy, but so far the economy has been able to tolerate it.”
Where can I find the cheapest gas in the United States?
The West Coast is one of the most expensive states to buy natural gas, according to public service website AAA.
Natural gas is the most expensive in California, with the average price of regular oil at $5.793 per gallon. Mid-grade fuel costs $5.992 per gallon, and premium fuel costs $6.148 per gallon.
California is followed by Nevada at $5.057 per gallon, Washington at $5.043 per gallon, Hawaii at $4.836 per gallon, and Oregon at $4.688 per gallon.
Conversely, drivers on the East Coast and South enjoy the lowest gas prices. Mississippi ($3.296 per gallon) has the lowest prices in the country, while Georgia ($3.356 per gallon), Louisiana ($3.395 per gallon), South Carolina ($3.411 per gallon) and Alabama ($3.411 per gallon) $3.418 per gallon) rounded out the bottom five.
The price difference is down to a range of factors, including proximity to refineries, ports, pipelines and blending terminals, as well as taxes.
Prices tend to be the highest and most volatile in California because the state has high fuel taxes and a more restrictive gasoline program than the federal government and has fewer refineries producing the product.