What’s bad for the economy is sometimes good for motorists.
High-profile bank failures sent stock market and crude oil prices plunging last week amid renewed concerns that a global recession could be taking shape.
U.S. crude oil prices dropped about 13% over the past week, from $74.43 a barrel on March 14 to $64.54 in early morning trading on Monday.
By midafternoon Monday, the price was hovering around $66.15.
Oil prices fell 17% over the past two weeks and oil futures were trading on Monday at their lowest prices since December 2021.
That’s a deep enough slide to put downward pressure on gas prices. According to travel club AAA’s weekly Gas Price Brief, on Monday a gallon of unleaded regular cost $3.44 nationwide, AAA statistics showed.
“There were significant losses in the oil market last week, which should enable gas prices to move lower again,” said AAA spokesman Mark Jenkins. “The failure of two U.S. banks raised concerns of a global recession that could eventually hamper fuel demand.”
As oil prices fell last week, gas prices increased in some parts of the country, including Florida, because of annual refinery maintenance and high springtime demand, AAA said. But gasoline futures – which reflect what traders believe gas will be selling for in the weeks to come – dropped 24 cents over the past two weeks.
That’s an indicator “that pump prices should move lower,” unless traders suddenly turn optimistic about the economy again, Jenkins said.
Patrick De Haan, head of petroleum analysis at the price-comparison website GasBuddy.com, warned that the reprieve could be short-lived. Or not.
“Should the outlook for the banking sector improve, we could again see gasoline prices race higher, while continued or additional distress could raise the possibility of a broader economic slowdown, keeping gasoline prices in check,” De Haan said in his weekly blog. “Overall, there are a lot of possibilities.”
Either way, motorists are paying less for gas right now compared to a year ago, when Russia’s invasion of Ukraine sparked fears of global oil shortages. Prices climbed rapidly after the invasion began in February, hitting $4.26 on average nationwide this time last year, then hitting a record high of $5.02 by June 14.