How low will gas prices go in New Jersey? A new prediction
When gas prices hit $5 a gallon in New Jersey in early June, there were concerns about prices at the pump climbing to $6 a gallon during the middle of the summer.
But then demand suddenly started dropping and the cost of gasoline has been going down ever since.
Tom Kloza, global head of energy analysis for the Oil Price Information Service, said this trend has been continuing because people are driving less and the weather has been cooperative.
“We’ve had plenty of supply in the U.S. for gasoline because there haven’t been any refinery shutdowns related to hurricane threats or whatever.”
So what happens next?
Kloza said barring some major weather event in the Gulf of Mexico, prices should continue to fall.
“You can expect to see the pace of decreases at the pump accelerate considerably in the next week to 10 days. I think you’ll get a lot of relief on gasoline prices and it’ll be sooner rather than later.”
He explained that could mean the cost of gas will start going down more than 1 or 2 cents a gallon every day.
“And then when we get into the last 100 days of the year it might stabilize a little bit because crude oil is still somewhat tight,” Kloza said.
How low will prices go?
Kloza said nobody has a crystal ball but he doesn't expect the prices to climb back down to where they were a year ago.
“I don’t think you’re going to get down to where prices were last year, around $3.25 or so, but I think you’ve probably got a shot to go to $3.50 to $3.75.”
He pointed out that by mid-September, refineries will be starting what’s called the gasoline blending season, which lowers the wholesale price of gas.
“So it’s nothing but good news probably for the next two weeks, unless you see probability curves on the Weather Channel or Accuweather or wherever you watch weather,” he said.
A new problem on the horizon
Kloza noted while gas prices should continue to go down for a while, heating oil and diesel numbers could go up "considerably.”
He said prices for power and natural gas in Europe have skyrocketed, mostly because of Russian cutbacks since the invasion of Ukraine
Kloza said while everybody is rooting for gas prices to continue to go down, if they dip below $3 a gallon that “could be indicative of the market suggesting that we’re in a recession.”