Atlanta, Georgia – Former President Donald Trump and Vice President Kamala Harris are actively campaigning for the 2024 election, making bold promises regarding energy policies. Trump has pledged to increase oil production to reduce energy prices, while Harris has reassured voters that she will not ban fracking. However, industry experts predict that energy prices are set to decrease regardless of the election outcome.
Tom Kloza, head of energy analysis at OPIS Global, anticipates a significant drop in energy prices, comparing the situation to the energy deflation experienced in 2020 during the pandemic lockdowns. Recent market volatility has seen oil prices plummet to their lowest levels since 2021 before a slight rebound. Gasoline prices have also fallen to their lowest point in months, with the national average at $3.24 per gallon.
Analysts project that prices will continue to decrease as the industry transitions to cheaper winter-grade gasoline. It is anticipated that the national average may dip below $3 per gallon in the coming weeks. The decline in prices is attributed to weak demand from China, the largest oil importer, as the country grapples with a housing crisis and shifts towards electric vehicles and natural gas consumption.
The rapid decline in oil prices has led Wall Street analysts to revise their forecasts downwards. Morgan Stanley recently adjusted its Brent price target to $75 per barrel in the fourth quarter of the year, citing significant demand weakness. The International Energy Agency also reduced its oil demand growth forecasts for 2024, particularly highlighting the contraction in Chinese oil demand.
Despite OPEC’s efforts to stabilize prices through production cuts, the cartel has delayed reintroducing barrels to the market due to the slump in oil prices. Concerns linger about whether there is enough demand to absorb the increased supply once it returns to the market. Analysts note that companies require US crude prices to be at least $64 per barrel to profitably drill new wells, ensuring production costs remain sustainable.
In the midst of the energy market fluctuations, both Harris and Trump have emphasized different aspects of energy policy in their campaigns. Harris highlighted record production levels in the U.S. and investments in clean energy, while Trump has promised increased oil production to lower prices. However, analysts caution that producers may regulate production to prevent prices from plummeting too low.
Overall, industry experts predict a more stable oil market in the coming year, with prices likely to remain modest. Factors such as the Ukraine war and COVID lockdowns have heavily influenced oil prices in recent years, but a quieter and more stable market is anticipated moving forward. Despite campaign promises and potential policy changes, market forces and global trends are expected to play a significant role in shaping the energy landscape in the near future.