Saturday, 02 December 2023

California gas prices finally falling, despite Iran sanctions

WALNUT CREEK, Calif. – Gas prices across the country are finally dropping after months of unseasonal increases, which were driven by stock market speculation over how U.S. sanctions against Iran would impact the global oil supply.

But oil prices have held steady since the sanctions took effect on Monday, surprising some analysts who predicted Iran's reduced exports would cause oil prices – and subsequently gas prices – to rise even further to end the year.

That hasn't happened, in part because oil prices on the stock market had been increasing all year as traders anticipated the Iran sanctions, mitigating potential sticker shock.

"Crude oil prices have been rising all year in anticipation of sanctions against Iran, which means motorists likely already experienced the worst effects of these sanctions on the price of gasoline," said Michael Blasky, spokesman for AAA Northern California. "If these oil prices continue to hold, we could see another 10-cent price drop in retail prices before Christmas."

California gasoline prices have dropped nearly 8 cents since reaching a 2018-high of $3.82 on Oct. 16. Most of the recent decrease can be attributed to California gas stations beginning to sell the state's winter blend of gasoline this month, which is cheaper for refineries to produce and costs about 6-10 cents less per gallon.

California's average price for unleaded gasoline on Tuesday was $3.74, according to AAA. Nationally, the average price for gasoline has dropped from $2.91 to $2.75 in just a few weeks.

Analysts predict the full impact of Iran sanctions may not be felt until next summer, when the travel season increases market demand for fuel. The Iran sanctions, as currently enforced, will remove about 2 percent of the global oil supply from the market, and it remains to be seen whether other oil producers can make up the difference.

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