Gas Prices Are Lowering, But Will It Stay?

While gas prices nationally have lowered by almost 20 cents in the last month, I don't recommend going out to buy that new gas guzzler just yet. Over the past 4 years gas prices have continued to fluctuate, with prices being considerably lower in the fall and winter months than in spring or summer. According to the US Energy Information Administration, the current national average cost for a gallon of gasoline is $3.299. That's down about a nickel from the previous week and around seven cents lower than this time last year. But is this just a trend, or can we expect it to stay?

With 13% of our crude oil coming from Saudi Arabia, it may not just be a blip. According to Reuters speaking to unnamed OPEC insiders, Saudi Arabia and Kuwait say they don't want to reduce their own production, and a possible solution is to lower oil to $90 or as low as $80 per barrel for as long as a year or two. This is good news for automobile owners across the country, as that would make further expensive investments in drilling less attractive in the US and maintain the Gulf's market share. However, this may just be a tactic by Saudi Arabia to take advantage of the rest of the OPEC (Organization of the Petroleum Exporting Countries). 

 Saudi Arabia may be willing to lower production, but they don't want to be the only ones doing it. According to Reuters, Venezuela is one example of a place that is refusing to turn down the taps and wants to keep things at over $100 a barrel. While the US only gets 9% of its petroleum from Venezuela, this can cause other petroleum importers to follow suit. By letting prices slip briefly, Saudi Arabia could sustain the lower revenues until other members decide to reduce pumping with them, which would then cause the cost per barrel to rise again.

Based on the previous 4 years graph of gas price fluctuation, I wouldn't count on these low prices staying for long.

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