A Purdue agricultural economist is projecting gasoline prices will remain low this summer.
Wally Tyner says there’s usually a bump in price for the summer months, but an industry surplus has kept crude oil around $50 a barrel.
“What that did is it gave the U.S. shale oil producers enough profit margin to increase their production,” he says. “Their costs have fallen 30-percent in the last three years.”
Tyner says the increase in shale oil production – now up to 600,000 barrels a day – should balance out OPEC’s 1.2 million barrel cut by the end of the year.
The U.S. Department of Energy projects summer gasoline to cost an average of $2.39 a gallon nationwide.
Tyner says in the Midwest, this summer’s gas prices should stay mostly below $2.50 a gallon.
He says even if the cost of a barrel of oil rises, the industry will grow faster and keep prices low.
“So we’ve got sort of an automatic regulator, keeping the price in the $50 range, and that keeps gas in the $2.10 to $2.50 range,” he says.
Tyner says the Midwest usually sees a lower average cost than the rest of the nation. He says people drive more in the summer – but with more fuel-efficient vehicles on the road, drivers are consuming less gas.