Oil prices plunged on Friday, but energy costs could be different in the coming years, according to an oil analyst.
Tom Kloza, Global Head of Energy Analysis, told Yahoo Finance Live that the energy transition is going to be a big deal, and it is going to be the next few years of pain. Russia's invasion of Ukraine has kept oil and other energy costs at historically elevated levels as Europe is forced to dislodge its dependence on Russian natural gas.
After Russian President Vladimir Putin called for a partial military mobilization earlier this week, Kloza noted that Russia is still a threat because of the flow of crude oil and refined products. Oil prices hit an eight-month low on Friday, as West Texas Intermediate CL F crude futures fell 6% to $78 barrel, while Brent BZ F futures dropped 5% to just above $85 barrel.
The U.S. gasoline prices have been mostly on a downward trend since reaching a new record in mid-June.
Kloza said that he doesn't think a big move higher is possible for the rest of 2022 because we survived a gasoline scare when we were at $5.0165 on June 14th.
The analyst said that in 2023 we will see what I call petronoia - the fear that there won't be enough petroleum molecules to go around, especially in the gasoline season. It will manifest itself, and then maybe we'll have another move. He said that he doesn't think gasoline prices will be much more expensive in 2023 than what we saw in the summer of 2022. I do believe that the bias is towards higher prices for energy rather than lower. The current demand for certain U.S refined products has been high and a harsh winter could affect supplies.
The products to watch are diesel and heating oil and jet fuel, according to Kloza.