Gas prices will start to drop in September: GasBuddy analyst

GasBuddy Head of Petroleum Analysis Patrick De Haan told "Varney & Co." on Thursday that gas prices are close to hitting a peak and forecasted that they will start to drop in September. 

The GasBuddy analyst told host Stuart Varney that he believes gas prices will be 10 to 25 cents lower by the end of the year and that "a lot of that will start mid to late September so long as we can clear hurricane season."

De Haan made the comments one day after the Labor Department reported that its consumer price index rose 5.4% year over year in July, matching the prior month's gain as the fastest since August 2008.  

Prices increased 0.5% last month, slowing from June’s 0.9% increase. Analysts surveyed by Refinitiv were expecting a 0.5% gain. 

GAS PRICES CLIMB AMID BIDEN'S PIPELINE CLOSURES

The department said prices for shelter, food, energy as well as new and used vehicles all increased in July. The energy index rose 1.6%, buoyed by a 2.4% gain in gasoline prices. 

The Labor Department reported that the price of gas increased 41.8% from the year before. 

Gas prices have been increasing at the pump for the past few weeks, reaching a national average of $3.19 a gallon as of Thursday, which is the most expensive gas price average of the year and $1.01 higher than the same time in 2020, according to AAA.  

The association noted that gas prices fluctuated across the country last week with states seeing as much as a nine-cent jump to a seven-cent decrease, pointing out that the difference in prices is in part because of the increase in demand and decrease in stocks, according to the Energy Information Administration. 

De Haan tweeted on Wednesday, citing GasBuddy data, that on "Tuesday U.S. gasoline demand rose 2.5% from the prior Tuesday and was 2.6% higher than the average of the last four Tuesdays."

On Thursday, West Texas Intermediate crude oil, the U.S. benchmark, slipped 21 cents to $69.04 a barrel. Brent Crude, the global benchmark, slipped 44 cents to $71.18 a barrel.

AAA noted that crude oil prices dropped below $70 a barrel at the end of last week and attributed the drop to concerns about the COVID-19 delta variant, growing case numbers and the possibility of potential lockdowns. The association pointed out that even though crude has been a little cheaper, gas prices are still positioned to stay elevated in August.

De Haan told Varney on Thursday that gas prices are in the "window" to soon reach a peak "as we start to get closer to the end of summer." 

He noted that schools are going to start opening soon and even though some offices aren’t going to start reopening just yet, he believes demand will peak and that will "cause gas prices to eventually come back down." 

De Haan provided the insight one day after the Biden administration urged OPEC and its allies to increase oil output to tackle rising gas prices that the administration views as a threat to the global economic recovery.

"While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022," a statement from National Security Advisor Jake Sullivan said. "At a critical moment in the global recovery, this is simply not enough." 

The request came as the Biden administration attempts to tackle climate change and discourages drilling at home.

President Biden revoked the permit for the Keystone XL oil pipeline project on his first day in office in a series of orders aimed at combating climate change, which also included temporarily suspending the issuance of oil and gas permits on federal lands and waters.

Rep. Dan Crenshaw, R-Texas, blasted the administration’s call for more oil production from OPEC on Wednesday, calling it "stupid" and "anti-American."

"Reaching a whole new level of stupid, the Biden administration asks OPEC (foreign oil) to increase production, while making every possible attempt to destroy CLEANER American oil and gas," Crenshaw tweeted on Wednesday. 

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De Haan said on Thursday that increasing production will "without a doubt" make a difference in the price of gas, noting the "healthy dose of hypocrisy from the administration on shutting down U.S. oil the first day in office and now kind of crawling to OPEC on our hands and knees and asking for more oil." 

"More oil on the global market would mean a rein in prices," De Haan stressed. 

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 FOX Business’ Jonathan Garber contributed to this report.