There are multiple projections showing oil is likely to hit $100 dollars a barrel this year, prices not seen in eight years. That’s sure to make commuters squirm, but an LSU Economist forecasts that while prices will near the triple-digit mark, they won’t stay there for long.
Dr. Loren Scott told WWL that Middle East oil production is set to significantly ramp up to meet the coming burst of spring travel-based demand.
“OPEC has a plan to add 400,000 barrels a day each month until we get to September,” said Scott. “Well that’s more than enough oil to cover all the increase in demand, and on top of that we have US production, North Sea, we’ve got Brazil, Guyana, and other places.”
Because of that Scott foresees oil prices continuing their steady rise into the spring, but plateauing near $100, and falling shortly thereafter. Afterward, he expects prices to stabilize at prices lower than they are now as the world moves to the endemic phase of COVID, and demand gets more predictable. That’s good long-term news for drivers but could mean a period in the next few months where prices rise by 10% or more from where they are now.
“There is a very close, almost one-to-one correlation between increases in oil prices and increases in gas prices,” said Scott. “There is about a six-week delay between when the price of oil goes up and the price of gas goes up.”
High gas prices might not be good for Metro area commuters, or those planning a spring road trip, but Scott notes it is a boon for the state’s overall economy and the state government’s budget.
