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“Going Up?” Oil Prices 2017

  • By Ryan Skidmore

Steady Goes it.

Prices will be stable. (http://www.eia.gov/analysis/) The reasons are varied and vast, but such is nature of divining markets. A major reason is many oil producing countries have agreed to cut production. (Gas Prices Opec Deal) Last year, prices swung wildly. (How high will gas prices go?) While generally low, prices could not be relied upon to stay the same from month to month or even week to week. From a low $1.50, they varied wildly to an average of $2.34. (How high will gas prices go?)

And Keep Going Up.

Predictions see prices going up in 2018. (http://www.eia.gov/analysis/) Prices are predicted to go up to $2.41 per gallon meaning that the increases will continue to be stable as we roll into next year. (http://www.eia.gov/analysis/) The fluctuation will not be as dramatic as this year and last year. The volatile cycle of the last few years appears to be smoothing out into a less volatile period of slightly higher, but far more stable prices. Is it the end of the cheap gas era? Yes. (Gas prices may hit 3 year high) However, due to the cyclical nature of gas prices and the uncertainty of international politics on the near horizon, it is entirely possible that cheap gas prices may return to North American shores sooner rather than later.

Some Wilder Predictions.

A few analysts are predicting $80 per barrel, a sharp deviation from the general consensus of $50-$60 a barrel. (Craziest oil price predictions) The main reason for this particular prediction was declining global inventories. On the other end of the spectrum is the prediction that oil prices will “dip below $40 a barrel.” (Crazy oil price predictions) A major reason, in this camp, for the figure is a resurgence of US shale. (Crazy oil price predictions) Judging by the current political trajectory of US, this could be a reasonable conclusion to draw. Indeed, the nature of outliers predictions is that they are usually incorrect, wholly or partially. Oil prices should be somewhere between $50-$60 per barrel and there should be few surprises. Fuel will not be “cheap” anymore, but it will be stable.

What does this mean to you?

As a business owner with a fleet of vehicles, you understand that fuel encompasses a large piece of your operational costs.  As the price of gas fluctuates, so does your costs, since they have a direct correlation.  You need to pay close attention to these trends to help you gauge your business’ economic impact and how to proactively prepare for them.  As you experienced in the past, when gas prices increase significantly, your profits can quickly diminish.  How can owners prepare for those unexpected circumstances? The best preparation is to run the business as efficient as possible, and reduce the amount of fuel used.  Thankfully, we have technology easily available that can help a business become fuel efficient.  Today you can easily use a fleet management solution that can help you identify areas of improvement.  You can closely monitor idling times, assess driving behavior, evaluate your trip routes, and many other metrics.  This business intelligence will give you all the insights you need to make changes and optimize your operations.  At the end of the day, the best way to mitigate risk is to be running as efficient as possible.  We can’t control gas prices, but we can prepare to use it as effective as possible.

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