G7 nations reportedly looking at price cap on Russian oil
With a price cap on Russian oil possibly being announced on Wednesday, market experts are weighing how it will affect US gas prices during one of the busiest travel seasons of the year.
“I want to steal a line from National Lampoon: It’s a stupid and pointless gesture, and it makes no sense because price caps don’t work at all,” said Fox Business contributor and Price Futures Group market analyst Phil Flynn. Said & Co. on Wednesday. “In fact, many times, they have the exact opposite effect.”
Flynn took his strong stance against the Group of Seven (G7) countries’ price cap idea while the US national gas average hit its lowest level in 268 days, GasBuddy head of petroleum analysis Patrick de Haan told earlier in the show.
The G7 nations are looking at Russian marine oil in a range between $65 and $70 a barrel in response to concerns about top crude importer China, which announced stricter COVID-19 restrictions late Tuesday. Reuters reported,
Sheetz slashes gas prices to $1.99 per gallon during Thanksgiving week
“We are seeing continued challenges with COVID in China, which is pushing oil prices down significantly as China works to shut down its economy, which limits oil consumption,” de Haan Told. “Last week, [seeing] Some of the biggest drops now – prices down $0.24 in Wisconsin in the run-up to Thanksgiving, down $0.23 in California.”
But Flynn warned that the price cap could backfire, and could reverse the recent decline in national gas prices.
“Countries can’t even agree on what’s a fair price for oil … If you come up with a price that’s too low or too high, you’re either going to restrict supply, or The price cap is not going to have any effect. Absolutely,” Flynn explained. “But at the end of the day, one thing I can tell you is when you put a price cap and demand goes up, and you don’t have that supply, prices are going to go up, and you’re going to have a shortage.” going to see.”
He continued to say that the G7 countries should “know better,” and be prepared for the possibility that the price cap may not have its intended effect.
“If Russia is still able to sell some oil, and if we’re going to be able to get around the price cap because there’s going to be some countries that won’t agree to it, like China, for example, then This oil is still going out,” Flynn argued. “I’m afraid Russia is going to teach them a lesson about the price cap.”
GasBuddy’s Dee Haan said current low gas prices may prompt last-minute travelers to hit the road this Thanksgiving.
“While not as many Americans are taking to the street [in] 2019, are higher than last year. But last-minute passengers who jump in the car and say, ‘Hey, gas prices are down $0.25, I feel a little better,’ the number of those passengers may increase as gas prices continue to decline. De Haan said.
A recent analysis by GasBuddy found that 20% more Americans are planning a road trip this holiday season than last year.
Get Fox Business on the go by clicking here
De Haan previously said, “This week will see relief all at the pump, with even more downside on the way, as oil prices fell to briefly trade below $80 a barrel last week.” said in a statement, “It is not impossible that if the oil market stays here, we could see a national average of $2.99 around Christmas, certainly the gift every motorist is looking forward to.”
“Drivers should not be in a rush to fill up as prices will be down nearly coast-to-coast over the heavily traveled Thanksgiving holiday,” he continued.
Fox Business’ Nora Colomer contributed to this report.
Credit: www.foxbusiness.com /