The winter season is typically where demand for gasoline decreases. That is happening, but recent activity in the Middle East is causing oil and gas prices to remain high.
“A seasonal weakness that we see in gasoline consumption is predictable. What’s not predictable is the situation that’s going on overseas,” said Patrick DeHaan, head of petroleum analysis for GasBuddy.
Riots broke out in Kazakhstan in Almaty, which is considered the country’s largest city and financial center. Protesters demanded that a price cap on Liquid Natural Gas (LNG) be reimposed. Kazakhstan has subsidized fuel for its 19 million people for years, and the sudden increase in fuel costs triggered has angered many of its residents.
“Kazakhstan is the 18th largest oil producer in the world. We also aren’t seeing a whole lot of improvement in Libya. Civil unrest is still prevalent there. That’s probably not going to be solved anytime soon,” said DeHaan.
Libya has seen declines in oil output due to pipeline maintenance, weeks after militias first shut down major oil fields. The rise of COVID infections due to the omicron variant is causing people to stay home more and demand to drop.
“Omicron is certainly leading to some downturn. Be that as it may, the issues on the other side with unrest in Kazakhstan and Libya are causing problems. These two incidents are enough to worry markets, which is why oil prices are drifting higher at a time when demand is typically soft,” said DeHaan.
There was a price cycle across Indiana last week.
“As we just started that cycle over, it is likely that we see prices drift lower through the rest of the week and into the weekend,” said DeHaan.
Indiana is paying 14 cents per gallon under the national average.