Gas prices are soaring one day after Trump boasts they’re so low they’re ‘like another Tax Cut’

A New York City cab driver fills his taxi up with gas at a Hess station in New York July 2, 2008. Nationwide, gasoline around $4 per gallon will cost taxi drivers 38 percent more per year -- $3,825 -- than it did in two years ago, according to the Taxi Limousine & Paratransit Association. To help cabbies, 11 U.S. cities have allowed taxis to charge a temporary fuel surcharge averaging $1.50 per trip and more municipalities are holding rate increase hearings. Picture taken July 2.

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A New York City cab driver fills his taxi up with gas at a Hess station in New York July 2, 2008. Nationwide, gasoline around $4 per gallon will cost taxi drivers 38 percent more per year — $3,825 — than it did in two years ago, according to the Taxi Limousine & Paratransit Association. To help cabbies, 11 U.S. cities have allowed taxis to charge a temporary fuel surcharge averaging $1.50 per trip and more municipalities are holding rate increase hearings. Picture taken July 2.
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Shannon Stapleton /Reuters

RBOB gasoline rose 4.88% to $1.3652 per gallon Wednesday, one day after President Donald Trump wrote on Twitter that they’re so low they’re like “another tax cut.”

“Do you think it’s just luck that gas prices are so low, and falling?” Trump tweeted on New Year’s Day. “Low gas prices are like another Tax Cut!”

RBOB prices have fallen nearly 40% in three months amid a supply glut and similar sell-off in crude oil. West Texas Intermediate crude oil was trading around $47 a barrel on Wednesday, up over 3%.

Phil Streible, senior market strategist at RJO Futures, a Chicago-based commodity futures brokerage, said investors could see prices rise from here.

“We could see a surge in gas prices with unseasonably warm weather predicted in January and lack of snow which is encouraging people to drive more, Streible told Business Insider in an email.

“Also, OPEC cuts, prospects of the Fed being done with raising interest rates and a recovery in crude oil prices are all helping lift futures.”

Meanwhile, the latest GasBuddy fuel outlook released Wednesday projects 2019 US gasoline prices will be $0.03 lower than last year, averaging $2.70 per gallon. Still, GasBuddy says the national retail average could jump to a “possible peak in May” to over $3 before falling into year-end.

Upside catalysts would be production cuts from OPEC and a strengthening domestic economy; an economic slowdown could weigh on prices.

Others say that a severe drop in oil prices has overstated fears around global growth.

“Oil today is playing out the narrative of the correlation between stocks and oil,” said Jeff Kilburg, CEO of KKM Financial, told Business Insider, adding he expects a retest of of above $50 per barrel in January.

“And moreover, who is leading who. Global growth expectations have been reeled in but, the drop in oil from $70 to $40 over exaggerated the lowered expectations of global growth.”

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