While Congress is still mulling over the Iranian nuclear deal, there’s talk it could lead to lower gas prices.
Iowa Department of Agriculture fuels analyst, Harold Hommes, says if the oil in Iran is freed up, it could impact gas prices in the U.S.
“It’s certainly a possibility, Iran is ready to begin exporting. They’ve got from my understanding, loaded vessels in place. They are actually using vessels as storage containers,” Hommes says.
He says Iran is storing a lot of crude oil, much like the U.S. He says if the agreement is approved, the oil from Iran would could start to move to the U.S. “That is going to hit the market, certainly going to put pressure, downward pressure on crude prices again. And that in turn will put downward pressure on refined products,” Hommes says.
Some analysts are saying the impact could push gas below $2 a gallon. Hommes isn’t sure gas will drop that much. “I don’t know if we are going to go back to $2 gas, but it could certainly happen,” according to Hommes. “If it does, it’s going to be well into the fall, past our peak driving season.” Hommes says he expects a gradual impact as gas production isn’t going to expand.
“The refiners can only handle so much. They can boost capacity on a marginal level, but it’s primarily going to put a softening initially on the crude side of things,” Hommes explains. “And then eventually in a more measure manner, we’ll start that downward cycle on the refined products.” He says the slow integration will likely keep gas prices from making a big drop all at once.