Oil prices fell on Monday as the repercussions of Britain's vote to leave the European Union continued to affect markets, with experts predicting the Brexit will have a slight, short-term impact on US gas prices, with possible longer-term implications to come.
Since Thursday, Brent crude futures and US crude benchmarks both fell about 7 percent as global financial markets took a plunge, as Reuters reported after Britain voted, 52 percent to 48 percent, to leave the European Union. On Monday, Brent crude futures were down $1 at $47.36 a barrel by 14:30 Greenwich mean time. US crude futures fell $1.07 to $46.57 a barrel.
Avery Ash, the director of federal relations for AAA, says it takes about two weeks for the cheaper crude oil prices to get through the distribution system and show up at the pump.
"The expectation would be, barring any market-moving event outside of purely the Brexit, is that this downward pressure on oil prices would mean slightly lower prices for consumers at a time of year when historically gas prices have been picking up as we head into the busy summer driving period," he tells The Christian Science Monitor.
Patrick DeHaan, senior petroleum analyst at GasBuddy.com, a retail fuel pricing information and data organization, tells the Monitor that the Brexit vote is having a "slight impact" on the US gas market.
"It is going to have a few more pennies of an impact, maybe over the next couple weeks you could attribute a nickel of the decline to the Brexit," he says.
Since Brexit, the dollar has gained against other currencies, making oil cheaper for the United States but more expensive for other countries with other currencies, Mr. DeHaan says. A weakened European economy could lead to a decreased demand for oil, which would pull US gas prices down further as global demand decreases.
Lower European demand due to economic weakness and the continued strengthening of the US dollar against other currencies could lead to a longer-term effect on US gas prices, Mr. Ash says. However, he says it remains to be seen if Brexit will have longer-term implications as there are a number of other factors that can impact oil prices.
DeHaan says the demand for gas remains high and he does not think there will be a significant impact this summer.
"We haven't seen a change in demand. This summer will likely remain one of the hottest, if not the hottest, summer for gasoline consumption on record," he says. "Realistically, fundamentals remain somewhat strong."
According to GasBuddy.com's price-tracker, the price of gasoline averages $2.285 per gallon, down 5.2 cents in the last week. This is 50 cents lower than last year at this time, which saves American consumers $200 million each day.
Ash said a global oversupply in crude oil has been the cause of the lower prices.
There is a larger impact possible over a more extended period of time, DeHaan says. Demand for oil in the US, the largest consumer of gasoline and oil, drops annually in autumn. This annual drop combined with the possible heating up of talks between Britain and the EU about Brexit's specifics in the fall may have an impact on US gas prices then.
"The immediate impact is very very minor, but does ramp up over time," he says. "If we do see an eventual Brexit, if we start to see those wheels of motion start to turn in the days, months, weeks, ahead, I think it could enhance gas prices declining this autumn."