The gas market has been rocked by the release of data from the US Energy Information Administration showing that the average gas price has dropped to $2.28 per gallon in the past month, the lowest in nearly a year.
While the drop is good news for consumers, it’s not good news, according to experts.
Ahead of the data release, the Energy Information Office at the Energy Department released its second-quarter outlook for the US economy.
While gas prices are down slightly from their December lows, the economy continues to expand, and the unemployment rate remains low.
But gas is still a major driver of inflation and job creation, according a note from the energy department.
The average price of natural gas has decreased by 0.2% in the second quarter, according the EIA.
Analysts had expected a drop of 2.2%, according to FactSet.
“In a world where the cost of energy has become increasingly competitive, gas prices will continue to drop, although this could also be a temporary lull,” Paul Kengor, chief market strategist at S&P Global, said in a statement.
Gas prices are one of many factors impacting US growth and economic growth, according as the U.S. continues to struggle with the impact of the Zika virus, according Kengorda.
This month, U.C. Berkeley economist Daniel J. Shapiro said that the energy price shock was expected to hurt growth.
In the second half of 2016, the average price for natural gas in the United States was $3.45 per million BTU, according FactSet, which is less than the $4.70 average price recorded for natural oil and less than that of the coal sector.
The price of oil also fell in the first half of the year.
The US is expected to experience its third-largest increase in gas consumption since World War II.
However, this year, the US could experience its lowest gas consumption in more than 50 years, according Jens Matthias, chief economist at the National Association of Manufacturers.
While gas prices have dropped significantly since December, the overall trend is good, he said in the statement.
“Gas prices have fallen for a number of reasons, most importantly the surge in domestic natural gas production from shale and the decline in gas prices that the shale boom has spurred,” Matthias said.
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