(Noted News) — The economic jolt from COVID-19 momentarily gave Americans the silver lining of plunging oil and gas prices for several months. But earlier this month, gas prices in Los Angeles County rose for the 27th day in a row. Forty-seven of the past 48 days have witnessed bumps in gas prices, currently at $3.81 a gallon, which is the highest since December of 2019.
In an interview with FOX, Patrick DeHaan, an analyst from GasBuddy, said that the primary source of the surging gas prices was the demand from people who are now slowly starting to leave the house after months of lockdowns, and going to do things and see places. Additionally, the recent attack on the Saudi Arabian oil facilities, allegedly done by Houthi rebels, has also driven up the prices.
“It’s been fast and furious. Americans are really starting to get out more and more… Last week was another record setter, that is the highest level of gasoline demand since the pandemic started, so it’s not all bad news. It’s just Americans are getting out more, of course… The attack on the Saudis, and last week’s Opec decision not to raise oil production is really causing gas prices to soar and now we’re just 22 cents from the three dollar a gallon mark, something that could happen as early as April.”
The analyst says that so far, western states are facing the brunt of the high gas prices.
“You go out west generally. Arizona, Idaho, Montana, Wyoming, many of those states are facing increases of 50 cents a gallon in the last month, but nowhere is it worse than Arizona where just in the last 3 weeks, really Phoenix, Tucson, prices are up over 60 cents a gallon.”
DeHaan says that the high gas prices are likely to sustain themselves in a rally as long as the economy starts to open up, and the demand for gas increases as more people are out and about doing things.
“A lot of it of course depends on vaccinations, states reopening. Many states now pulling back mandates, restrictions have loosened up significantly. We could see gasoline demand this summer start to approach some of those normal levels especially as you indicated pent up demand. Americans have been locked down for a long period of time. A lot of them are really trying to get out, stimulus is on the table. I think you could see some of the very high demand levels that we would have anticipated this summer if that happens, and that could bring with it even higher gas prices.”
DeHaan’s outlook echoes that of other analysts, such as Damien Courvalin of Goldman Sachs who is expecting a $75 a barrel oil in Q2 of 2021, and $80 a barrel in Q3.
“This increase in our price forecast reflects stronger time spreads, with our updated inventory path consistent with $5/bbl additional backwardation over the next six months relative to our prior forecast.”
Courvalin has previously been bullish on Brent oil, citing OPEC’s decision to cut oil production, as well as President Biden’s climate change policies that put American oil production at a disadvantage to the rest of the world. The US is producing 2 million barrels of oil less than last year, and the Keystone pipeline has officially been ended. Production cuts were approved for all countries in OPEC except Russia and Kazakhstan.
The working class is currently facing what can arguably be defined as the “K shaped recovery” many analysts described, where tradable assets soar in prices while normal people, who generally do not own anything, have to buy more expensive food and energy despite losing their jobs.