Gas Prices May Collapse On Oil Supply Surge
OPEC+, the single largest source of crude in the world, may increase its production in the summer. It did so as recently as last month. Bloomberg states, “OPEC+ members are discussing making a third consecutive oil production surge in July, to be decided at the group’s meeting in just over a week, delegates said.”
Speculation is that this may be to “regain market share.” The US, in particular, has become a larger and larger supplier of crude.
China Economy
A factor that needs to be considered is that global demand is falling, primarily due to China’s weak economy.
If oil prices fall, it will be on top of the drop from $80 to $60 throughout 2025. Gas prices have fallen from $4.60 in the summer of 2022 to under $3 today.
Low gas prices in the US have two effects. First, they help the consumer segment of the economy and several industries, like airlines. Lower consumer spending means higher disposable income, which positively affects GDP.
EV Demand Drop
Lower gas prices also soften demand for EVs. One reason for the assumption that 50% of all new car sales in 2030 would be EVs was that rising oil prices would move gas to $6 or higher. For the time being, that theory has been wrecked.
OPEC+ may be the best thing to happen to US consumer spending in over a year. It would also reverse the ongoing drop in consumer spending.
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