A Purdue University economist expects gas prices to remain low this summer. Wally Tyner says lower demand and increased U.S. production are offsetting OPEC production cuts, keeping oil prices low.
OPEC agreed this week to extend production cuts through March of 2018, but Tyner, the James & Lois Ackerman professor of Agricultural Economics, says that has just incentivized U.S. producers to increase investment and drilling. By the end of the year, he says U.S. shale oil production will have grown by 1.2 million barrels per day, ultimately equaling the total cut by OPEC.
Demand is down, Tyner says, because, even though consumers are driving more, they are driving more fuel-efficient cars.
In all, Tyner expects gas prices through the summer to generally range between $2.10 and $2.50 per gallon. That’s a bit higher than last summer, but the second-lowest level since 2009.