00:00 Speaker A
With these latest sanctions announced, what is the ripple effect here? And does it increase the likelihood of that $4 price point at the pump in just two weeks?
00:15 Patrick
Well, it certainly introduces some risk. If Iran retaliates, there could be some impact. But gasoline prices usually seasonally start to decline this time of year. So unless something drastic and new happens, gas prices may still see some downward up pressure in the weeks ahead. The Trump administration also pushing up the switch over back to cheaper winter gasoline, allowing that switch over to happen now two weeks earlier. So there may be some relief. The national average has never been above $4 gallon on Labor Day.
00:55 Patrick
Even if it does slip slightly below that level by Labor Day, which certainly could happen, the all-time record back in 2012 on Labor Day was 383 a gallon. So consumers are still likely to pay amongst the highest, if not record setting prices this labor day, but there may be some relief in sight. Not only with that switch over back to cheaper winter gasoline happening sooner, rather than mid-September when it usually happens, but gasoline demand starting to slowly decline now as schools reopen, Americans get back into the grind.
01:32 Patrick
So there may be a little bit of relief ahead of Labor Day, but for diesel quite the opposite. Another new Ukrainian drone attack on a major Russian oil refinery, disconnecting diesel, pushing it higher, whether or not we see diesel hit new records, well, that’s really going to be a function on what continues to develop. Ukraine has been uh attacking Russian oil refineries incessantly for the last few weeks. Um that is the bigger question going into ag season. Farmers may have to uh dig deeper uh to fill up with diesel.
02:08 Speaker A
So and at the same time we could see be seeing some relief on on the gas pump front and what we pay at the pump. You mentioned also that diesel is expected to stay higher because of what we’re seeing with the ongoing tension between Ukraine and Russia. What exactly is the ripple effect there, Patrick? Because I think that many Americans don’t realize the implications that this has for broader consumer goods.
02:35 Patrick
Yeah, I mean, as you mentioned, diesel is the fuel that powers the US economy from trains to tractors and trucks, especially as farmers get out into their field now ahead of harvesting their crops. The price of diesel closing in on records, just 25 cents a gallon away from that today at 558. It’s extremely problematic for uh the agricultural sector. And you know, I’ve seen posts on social media in recent days that truck rates are near record levels as well. Uh so that’s extremely problematic for the economy that’s driven by diesel.
03:10 Patrick
And it certainly will continue to lead to a trickle-down effect that many Americans will start to again feel in the weeks and months ahead.