MORGANTOWN, W.Va. — The price of gas in West Virginia has been inching up in the last week.
GasBuddy Senior Petroleum Analyst Patrick Dehaan said that despite low demand, prices are increasing slightly.
“The average price of gasoline in West Virginia has gone up in the last week, about 3.5 cents,” Dehaan said Tuesday during an appearance on WAJR’s “Talk of the Town.” “The statewide average is now $3.40 per gallon and I think it will be a little higher by Memorial Day but I don’t think it will be $4 a gallon.”
While China reopens and demand for oil increases, the price of a barrel has dropped to a three-month low due to the banking crisis. In the U.S., the failures of the Silicon Valley and Signature banks started the worry and now new concerns question the viability of Credit Suisse after their biggest backer, the Saudi National Bank, said that due to regulatory issues, they cannot provide further assistance.
Additionally, so far in 2023, more than 130,000 workers in the tech industry have lost their jobs due to long-term economic uncertainty.
“For the first time in quite some time, we have just fallen below the $70 a barrel mark on concerns over the broader economy,” Dehaan said. “So oil prices are plummeting on the fear we could see an economic slowdown that could reduce consumption.”
The Chinese economy is reopening, fueling higher demand. Despite importing less oil in January and February this year, the refinery throughput is up nearly 400,000 barrels, to 14.36, from the same period last year.
“There are a lot of balances when you talk about the price of oil, and right now the concerns over the banking sector are offsetting the rise in consumption from Chinese refineries as demand goes up in China.”
Demand in the U.S. has fallen steadily since July 2022 and during that time record numbers of holiday travelers were reported. Dehaan expects traditional warmer weather trends to increase but how much is the question.
“A lot of Americans are still opting to work from home when they can, and that has reduced consumption,” Dehaan said. “We’re also still in the final weeks of winter, when it’s not exactly conducive to go outside to take a road trip and travel, and kids are still in school, so don’t you see vacations.”
As the banking crisis unfolds, energy policy evolves and the war in Ukraine continues, Dehaan said to expect volatile energy markets.
“I think right now there’s a lot of anxiety over the unknowns,” Dehaan said. “Beyond that, we are coming into summer when we expect demand to go up but if there’s a broader economic slowdown that certainly could put some downward pressure on the price of oil.”