Energy economist Wally Tyner says the recent international agreement to temporarily cap Iran’s nuclear development programs has helped keep holiday season gas prices considerably lower than last year.
The Purdue University professor of agricultural economics had already calculated that gas prices would range between $3 and $3.40 per gallon through the end of the year. The Iran deal helped reverse a recent crude oil price increase that would have driven up gas prices. This time last year gas prices were about 20 cents higher.
Tyner says the abundant supply of domestic shale oil has reduced gas prices, but he also credits the industry’s quick, uneventful transition to the winter blend of gas and few mechanical difficulties at refineries.
The refineries are also perfecting the efficiencies of “just-in-time” delivery of product that reduces overhead and prices by limiting the amount of “stock on hand.”
“Of course, having limited stock on hand means the consumer would experience an almost immediate price spike if crude supply or refinery capacity were decreased for any reason,” Tyner said.
Source: Purdue News