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U.S. gasoline and commodity futures prices fell to end the week following a volatile few days for global energy markets that saw new recession forecasts and White House support for a federal gas tax holiday.
While Russia’s throttling of natural gas supplies to Europe drives prices up for the continent, U.S. markets are seeing some relief — for now.
BIDEN GAS TAX HOLIDAY: HOW IT WOULD WORK AND WHO WOULD BENEFIT
Natural gas futures opened Friday at $6.23 per MMBtu, down from nearly $7 per MMBtu a week ago. Prices have fallen by around 33% from the June 6 peak of $9.32.
Market analysts have attributed the decline in gas prices to the June 8 explosion and resultant outage at Texas’s Freeport LNG terminal, which has been sending most of its liquefied natural gas volumes to Europe.
Freeport has the capacity to accommodate just upwards of 2 billion cubic feet of gas per day but is not expected to be fully back online until late this year. That reduction in gas demand for exports has helped to drive prices down, according to Rystad Energy.
U.S. crude oil futures also dropped considerably over the last week in the face of more recession talk. West Texas Intermediate fell by more than 10% week over week on Thursday before recovering on Friday to around $107 per barrel.
A number of financial analysts have said that the chances of a recession have risen, including Citigroup economist Nathan Sheets, who put the odds of a recession at 50%.
Sheets said on Wednesday that central banks’ aggressive inflation-controlling policies and a softening of global demand for consumer goods are making a recession more likely.
Economists with financial firm Nomura predicted on Monday that a recession in the fourth quarter of the year is “more likely than not.”
Meanwhile, gasoline prices have fallen with oil from their record levels set earlier in the month and now stand back below $5 per gallon on average.
The average price of gasoline nationally fell down to $4.92 per gallon on Friday after reaching a nominal record of $5.016 on June 14, according to the American Automobile Association. Diesel, meanwhile, is up slightly compared to its average from a week ago.
As of Thursday, the average price of gasoline had fallen by 14 cents in Florida compared to the week before, while Maryland, Indiana, and South Carolina each saw their averages drop by 11 cents, data from GasBuddy show.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Garrett Golding, a business economist for the Federal Reserve Bank of Dallas, said in a recent research note that pent-up demand for travel coming out of the COVID-19 pandemic is keeping demand for fuel high and that high prices will be a fixture without a change in supply and demand fundamentals.
“Without an adequate supply response arriving in the near term from either crude oil production or refining capacity,” Golding wrote, “demand destruction is likely the only variable that can eventually cause the fuel price surge to slow and reverse.”
