Gasoline prices: GasBuddy predicts that national averages could rise to nearly $ 4 by 2022 Memorial Day

Pump pain gets worse before it gets better.

This is due to the new GasBuddy forecast that the national average will rise from $ 3.02 a gallon this year to $ 3.41 a gallon in 2022.

It will reverse some of the recent bailouts received by American drivers as gas prices slowly receded from their seven-year highs.

Gas Buddy’s forecast, which is shared exclusively with CNN, is that pump prices will peak nationwide in May with an average of $ 3.79 per month and will be below current levels by late 2022.

Patrick de Khan, Head of Oil Analysis at Gas Buddy, an app that tracks fuel prices, demand and outages, said:

It will amplify inflationary pressures that will hit American families working on the biggest price surges in nearly 40 years. And that would add to the White House’s political headaches.

more: Food is more expensive than it was decades ago

According to AAA, the national average of pumps fell to $ 3.29 a gallon on Monday. This is down 13 cents from the peak of $ 3.42 on November 8.

The demand for higher gas prices in the coming months is in contrast to government and some (but not all) forecasts on Wall Street.

The US Energy Information Administration said on December 7 that the national average is likely to fall to $ 3.01 a gallon in January and $ 2.88 in 2022. Citigroup also predicted a “rapid fall” in energy prices, including the potential bear market for oil next year.

“The economy is hot.”

GasBuddy makes forecasts based on several key themes, including demand that continues to recover from COVID much faster than supply.

“The economy is booming. Demand is skyrocketing, but supply is catching up even after the significant cuts in 2020,” DeHaan said.

OPEC and its allies enacted unprecedented production cuts in the spring of 2020 after oil prices fell below zero for the first time. US oil companies have also cut production.

Despite the high prices, neither OPEC + nor US oil producers have returned to pre-COVID production.

Related item: Gas reaches $ 7.59 a gallon in the city of California

The closure of the refinery is also a problem

Another major factor is the closure of major refineries in recent years.

The low prices when the COVID erupted closed some refineries and mass-produced gasoline, jet fuel and diesel, which the economy depends on.

Another Louisiana refinery was damaged by Hurricane Aida in August and urged the facility to be converted to an oil terminal on behalf of Phillips 66.

And last week, the ExxonMobil plant in Baytown, Texas, one of America’s largest refineries, shook. By an explosion that injured at least four workers..

more: Sheriffs say four people were injured in a “serious industrial accident” at a Texas oil refinery

Tom Croza, chief oil analyst at oil pricing services, previously told CNN that the Baytown refinery accident could put pressure on the already constrained gasoline supply. Croza said it wasn’t surprising to see the average price rise to $ 4 per gallon in most parts of the country this spring and summer.

According to the EIA, refinery capacity fell to its lowest level in six years in 2021. GasBuddy analyst De Haan said the abolition of multiple refineries has helped boost price outlook.

“As a result of the closure of these refineries, there is less room for breathing,” he said.

“Anything can change”

Fortunately, GasBuddy does not expect gas prices to continue to rise in the spring.

Forecasts are that gas prices should remain high at $ 3.78 a gallon in June and $ 3.57 in July, but will fall sharply as demand cools. Gas Buddy expects gasoline prices to average $ 3.01 a gallon by December, which is below current levels.

Of course, we can’t say for sure where the gas price will go next. COVID has made it very difficult to accurately predict much about today’s economy.

GasBuddy’s previous forecasts were pretty close to where prices would end up, but the company didn’t expect a surge in 2021.

DeHaan acknowledges that there are many uncertainties today, especially in terms of COVID.

“Anything can change,” he said. “Tomorrow there are ridiculous varieties and prices can plummet.”

Biden’s historical intervention

Nonetheless, $ 4 per gallon of gas insecurity only intensifies political debate over rising gas prices.

Republicans have sought to condemn the impact of energy stickers, pointing out President Joe Biden’s ambitious climate issues.

Biden joined the fight in November by forming a coalition of energy-consuming countries to intervene in the oil market. The White House announced the largest barrel release in history from its strategic petroleum reserves and persuaded China, India, South Korea and other countries to join.

See: Biden talks about gas prices, liberation from oil reserves

Rumors of the intervention lowered oil prices by about 10% before the announcement of the SPR, but experts did not believe the move would provide a lasting bailout on energy prices. Then, with the advent of Omicron, oil prices plummeted temporarily before oil prices rebounded somewhat.

Emily Symons, a White House spokesman, noted that the average gasoline price in 21 states is below $ 3.15 a gallon, below the real average for 20 years.

“Current price levels aren’t unprecedented, but the president believes they’re too high, especially given that we’re out of the once-in-a-century pandemic,” Simons said in an email. I told CNN.

Keystone pipeline debate

Biden critics frequently point out his first day decision to revoke the Keystone XL pipeline permit.

However, the pipeline did not even plan to begin transporting oil until 2023. Even the American Petroleum Institute admits that keystone is not the main factor behind today’s high prices.

“Americans who believe that the pipeline somehow believes they are producing oil. They aren’t. They’re just carrying oil,” DeHaan said.

In any case, about half of the US oil pipeline space has not been used after years of rapid expansion.

According to Wood Mackenzie, pipeline capacity in the United States is only about 50%, compared to the 60% to 70% range before COVID.

DeHaan states that the Biden administration has issued a drilling moratorium on federal land, which has been blocked in court and the Home Office has recently issued sufficient permits.

“No matter who was in the Oval Office, we saw soaring gas prices,” he said.

The-CNN-Wire ™ & © 2021 Cable News Network, Inc., Warner Media Company. all rights reserved.

Gasoline prices: GasBuddy predicts that national averages could rise to nearly $ 4 by 2022 Memorial Day

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