Posted in: Gas Prices,
by Patrick DeHaan on Oct 1, 2013 03:25 PM
With today's shutdown of the federal government, many are asking if this could have an impact on gasoline prices. Even if the government hadn't shut down, gasoline prices were likely to continue their recent decline. But if the government remains closed for more than say a week or two, if could push gasoline prices even lower.
Many analysts fear an extended government shutdown could have a crippling impact on stock markets and the U.S. economy as federal employees remain out of work and unpaid. This could in turn stifle gasoline demand around the country and slow spending, and would almost certainly mean oil and gasoline prices would drop sharply.
As it stands today, gasoline prices have been on decline for 29 straight days, and currently stand 38 cents per gallon lower than a year ago, sitting at $3.42/gallon. A hypothetical situation, which I'll say is unlikely right now, is that the government remains shut for two weeks: oil prices could possibly drop $5-$10/bbl or even more, and gasoline prices nationally could drop under $3/gallon. Keep in mind, this is just one of many situations that could play out, but an extended government shutdown would have far reaching impacts, and gasoline prices would likely drop.
Many can recall the 2008 recession, triggered by a collapse of big banks- gasoline prices shed over well $2 per gallon. This situation would likely not be as crippling, but could mean a drop at the pump the longer it continues.
We're keeping an eye on the situation, but for now, are not expecting a significant change in the trajectory of oil and gasoline prices, but with politicians, who knows what will take place. We're here watching for you.