How the Brexit Vote Will Affect You At The Pump

The Brexit is a disaster.

Just how much of a disaster it will be remains to be seen. Americans however, may actually benefit from this mess at the pump

The global effects of Great Britain’s exit from the European Union could range from extreme economic chaos to a mild annoyance where markets dip but recover quickly. The Oil and gas markets were one of the first to feel significant negative impacts of this decision. Share prices are down as much as 10 percent and are not rebounding.

This is good news for consumers—at least short term—as gas prices are anticipated to drop a little and then stagnate. Analysts don’t expect the impact to be big, but it’s likely that drivers might see lower prices in the short term as market jitters slow down what had been recovering gas prices.

Barbara Shook, senior reporter at large for the Energy Intelligence Group told NBC News: “I see it only as a modest impact, if that. I see it in the pennies,” she said, but this new factor comes during summer driving season, when demand for gasoline is at its highest.

Gas prices for the year peaked earlier this month, and then began steadily declining as the Brexit vote approached. Prices at the pump have dropped for 24 days straight and according to AAA, are now about 47 cents lower than they were this time last year.

“This comes at a time of the year when we do tend to see gas prices increasing,” said Avery Ash, Director of Federal Affairs at AAA. “The expectation for right now is that it’s exerting downward pressure.” For every $10 the price of a barrel of oil changes at the wholesale level, the price of a gallon of gasoline moves about 25 cents.

What is noted and emphasized by analysts is that much of hoopla surrounding the current situation with the markets is a knee-jerk or emotional reaction to an uncertain situation, rather than an overnight shift in supply or demand.

Experts also point out that there are plenty of other potential factors in the mix that could raise oil prices– from geopolitical instability (a.k.a. the Trump Factor) to the weather. Which means that the reduction in the Brexit gas prices could be very short lived.

Featured image by Mike Mozart on Flickr, available for use under Creative Commons 2.0 license.