When could California gas prices start to drop?
THE S&P 500 GAINED 122 POINTS. WELL, WHAT’S THE STRAIT OF HORMUZ REOPENS THIS WEEK? A LOT OF EYES ARE GOING TO BE ON THE GAS PRICES. CALIFORNIA SAW A SPIKE IN PRICES ONCE THE WAR IN IRAN BEGAN ON FEBRUARY 28TH. THEY’VE HOVERED AROUND OR ABOVE $6 FOR MOST OF THE PAST THREE MONTHS. DOUG JOHNSON WITH TRIPLE A JOINS US NOW. AND, YOU KNOW, THE WAR STARTED. THESE PRICES SKYROCKETED. INTERESTINGLY ENOUGH, THE PAST MONTH, PRICES HAVE COME DOWN IN CALIFORNIA. WE’RE NOW PAYING ABOUT 5.76. AND THIS WAS EVEN BEFORE THERE WAS A DEAL WITH IRAN. WHY HAVE THE PRICES ALREADY STARTED TO COME DOWN? WELL REALLY IT’S DEMAND. PEOPLE ALREADY WENT ON THEIR MEMORIAL DAY VACATIONS AND PRICES DROPPED HERE IN CALIFORNIA, ABOUT $0.40 IN THE LAST MONTH. BUT IF YOU LOOK BACK TO A YEAR AGO, WHAT WE WERE PAYING IN 2025, WE’RE UP ABOUT $1.10 FROM WHERE WE WERE IN THOSE DAYS. SO OBVIOUSLY DOWN A LITTLE BIT, BUT STILL PRETTY HIGH. SO HOW DOES THE STRAIT OF HORMUZ IMPACT GAS PRICES IN CALIFORNIA? A LOT OF PEOPLE STRUGGLE MAKING THAT CONNECTION. YEAH. HONESTLY, IT’S ALL THE OIL IN THE WORLD. THE GLOBAL MARKET IS IMPACTED BY ANY SORT OF CONFLICT ANYWHERE IN THE GLOBE. SO WHAT REALLY NEEDS TO HAPPEN IS WE NEED TO HAVE THE SHIPPING COMPANIES AND THE INSURANCE COMPANIES FEEL CONFIDENT THAT THEIR CARGO AND THEIR CREW CAN GET THROUGH THE STRAIT OF HORMUZ, AND THAT THEY CAN DELIVER. UNTIL THAT HAPPENS, REALLY, WE MAY NOT SEE PRICES COME DOWN. IT MIGHT TAKE A FEW MONTHS FOR THAT TO HAPPEN. THE OTHER THING YOU GOT TO KEEP IN MIND IS SOME OF THE INFRASTRUCTURE IN THE MIDDLE EAST. A LOT OF THOSE ARAB COUNTRIES HAD IRANIAN MISSILES FIRED AT THEIR INFRASTRUCTURE. OBVIOUSLY, IRAN HAD A LOT OF ITS INFRASTRUCTURE DESTROYED. SO ALL THAT NEEDS TO BE REPAIRED BEFORE SOME OF THESE PRICES CAN COME DOWN LOCALLY. AND OF COURSE, WE DON’T GET OUR OIL FROM IRAN, BUT CHINA AND INDIA DO. AND WHEN THEY CAN’T GET THEIR OIL FROM THERE, THEY’RE GOING TO THE SAME SOURCES WE ARE. ALL RIGHT. SO BEST CASE SCENARIO, YOU WITH YOUR EXPERTISE, HOW SOON BEFORE GAS PRICES FALL AND WHAT PRICES SHOULD WE EXPECT THEM TO REACH? I MEAN, I DON’T HAVE A CRYSTAL BALL. COULDN’T REALLY PREDICT. BUT I WILL SAY THAT, YOU KNOW, IN A TYPICAL YEAR, WE DO START TO SEE PRICES COME BACK DOWN AFTER THE SUMMER. WE SWITCH OVER TO THE WINTER BLEND ON NOVEMBER 1ST. SO OBVIOUSLY THE WINTER BLENDS A LOT CHEAPER, MORE CHEAPER THAN THE SUMMER BLEND, LESS ADDITIVES. WE WILL SEE PRICES COME DOWN BY THEN, BUT UNTIL THEN IT’S SUPPLY AND DEMAND, AND THERE’S GOING TO BE A LOT OF DEMAND AHEAD OF THE 4TH OF JULY AHEAD OF LABOR DAY. SO YOU CAN PROBABLY EXPECT TO SEE PRICE
AAA’s Doug Johnson discusses when drivers could see relief at the pump as the Strait of Hormuz is expected to reopen this week.
AAA’s Doug Johnson discusses when drivers could see relief at the pump as the Strait of Hormuz is expected to reopen this week.