18 September 2013 23:42 [Source: ICIS news]
HOUSTON (ICIS)--US retail gasoline prices could fall below the $3/gal mark despite a recent report that said it may never drop that low again, an industry analyst said on Wednesday.
On Tuesday, automobile organisation AAA said the average price of retail gasoline in the US has stayed above $3/gal for 1,000 consecutive days and will remain above that mark for quite some time, even another 1,000 days, barring a major economic recession.
However, at least one industry analyst disagreed with that prediction, saying that when it comes to oil and gasoline prices, “never say never".
“Obviously I disagree with AAA. While they are predicting a new era of higher gas prices, I am predicting that we are closer to the end,” said Phil Flynn, senior market analyst at the PRICE Futures Group.
According to Flynn, stifled demand is the top reason why prices should decline.
“US demand for gas is at a 12-year low and is poised to trend lower over the next 1,000 days. Longer term it is even bleaker for demand, as alternative fuels are cutting into demand,” he said.
As more vehicles increase fuel efficiency, and become less expensive to purchase, gasoline demand will taper off, Flynn said. Furthermore, gasoline production in the US is up near all-time highs, causing increased supplies.
“The US is capable of producing more gas each day than we consume each day,” said Flynn. “And now the infrastructure is catching up to our booming supply capability.”
While the drop below $3/gal may not take place immediately, all factors are pointing to a lower price soon, he said.
“So If I am right and AAA is wrong, I will be the last one to criticize them,” Flynn said. “But I think they will learn that you should never say never.”
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