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How high could gas prices get this summer? What experts say

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In this inventory picture, a buyer pumps fuel at an Exxon fuel station on Tuesday, May 10, 2022, in Miami.

AP

With the busy summer season commute season coming near, many are questioning how top may just U.S. fuel costs get?

Prices hit a national file on Tuesday, May 24 — $4.598 a gallon — in step with AAA.

This comes after a JPMorgan analyst predicted a “cruel summer” with fuel costs doubtlessly hitting a national reasonable of a minimum of $6 in a Global Commodities Oil Flash Note printed May 17.

“With expectations of strong driving demand — traditionally, the US summer driving season starts on Memorial Day, which lands this year on May 30, and lasts until Labor Day in early September — US retail price could surge another 37% by August to a $6.20/gal national average.”

Here’s what mavens say as Memorial Day nears:

Supply and insist for gasoline

“Typically, refiners produce more gasoline ahead of the summer road-trip season, building up inventories. But this year, since mid-April, US gasoline inventories have fallen counter seasonally and today sit at the lowest seasonal levels since 2019,” the JPMorgan record stated.

The disconnect between provide and a better seasonal call for is why the analyst has predicted costs may just spike additional and hit $6, a worth by no means observed prior to, in step with the record.

Patrick De Haan, GasBuddy’s head of petroleum research, advised McClatchy News over the telephone that for “various reasons,” more or less part a dozen refineries were misplaced within the U.S. since 2019 and “amidst demand, that’s very high.”

“There’s a diminished ability for refineries to meet that demand. So they’re going to be critical this summer delivering enough fuel,” he added.

Robert Johnston, an accessory senior analysis pupil on the Columbia Center on Global Energy Policy, advised McClatchy News in a remark that JPMorgan’s prediction is “probable” as “some parts of the country are already at that price level.”

In California, the common value for a gallon of fuel is $6.06 as of May 24, in step with AAA.

“Combined with low inventories and strong demand that is a recipe for high prices,” Johnston stated.

He added that costs will most probably keep top this summer season “to encourage conservation and lower demand. That is the job of the market at this point.”

Meanwhile, De Haan answered to JPMorgan’s $6.20 a gallon nationwide reasonable prediction May 18 on Twitter writing “this is ‘not’ a guarantee.”

“However- there’s little margin for error. $5 is a strong possibility. But $6? Not impossible. But improbable. For now.”

When requested why the $6 vary fuel costs prediction used to be “improbable,” De Haan advised McClatchy News that President Joe Biden “would likely pull out more tools, to try and bring prices down, given how high” that will be.

“If it were to happen, I certainly think that there would be a significant toll on the economy that would likely cause demand to go down much sooner than we reach that $6/$6.20 a gallon mark.”

Abhiram Rajendran, who may be an accessory analysis pupil at Columbia’s Center on Global Energy Policy and the top of Global Oil/Downstream Markets for North America Energy Research, advised McClatchy News over the telephone that he consents the affect of call for is a “key point” in emerging costs however perspectives JPMorgan’s $6.20 a gallon prediction as “probably a little bit of a stretch.”

However, he stated “we share a similar view that it’s going to be a fairly strained summer” and he believes there’s a risk for gas costs to succeed in round $5 in step with gallon national reasonable right through the height of summer season across the 4th of July.

“You sort of have this big rush around 4th of July, then things taper off to some degree,” Rajendran stated. “As you kind of get closer to Labor Day, you have another kind of surge in demand.”

He additionally stated there’s most probably going to be “a steady increase” in fuel costs as soon as Memorial Day weekend hits.

One factor using summer season call for, in step with Rajendran, is top diesel costs and the way this “tends to filter over to the jet fuel market.”

Airline “ticket prices have been increasing and will continue to increase,” he stated. As a consequence, “for folks looking to travel over the summer, instead of flying, they may end up driving more.”

Other elements that push costs upper

In regards to the opportunity of the national reasonable achieving $5 a gallon this summer season, De Haan stated that’s additionally now not a “guarantee,” however “there are conditions that could push us there…conditions that could worsen over the course of the summer.”

“At a time that demand remains high and the economy’s recovering…my fear is that any small disruption could morph into a price event that does bring the national average over $5 a gallon,” De Haan advised McClatchy News.

“Now, I don’t think we’ll get there without some sort of drastic departure from where we stand today on a few different issues, mainly Russia and Ukraine and the state of the economy.”

Meanwhile, Johnston stated a significant component using fuel costs “is a combination of high global crude oil prices and inflation.”

“Global crude oil prices are high because of strong demand, low spare capacity, and a reduction in Russian supply because of the military situation and associated sanctions,” he famous, relating to Russia’s invasion of Ukraine.

De Haan stated the Russia and Ukraine scenario is “significant” because of “the responses that it has invoked from countries” similar to “essentially cutting Russian oil off from the global market.”

Another separate situation he stated that might push fuel costs to the $5 area is that if a significant storm happens as a result of this has impacted refining and oil manufacturing previously, in step with De Haan.

Hurricane season within the Atlantic area generally lasts from June till the tip of November, in step with the National Oceanic and Atmospheric Administration. In the Eastern Pacific area, it starts May 15 and is going via past due November.

“There’s just a lot of different factors that are playing into, you know, what we’re paying at the pump,” De Haan stated.

When may just there be some reduction?

Rajendran and Johnston stated fuel costs might be anticipated to ease after Labor Day on Sept. 5.

De Haan stated that “there may be some relief in August barring a hurricane but I think more reliable relief will start coming in mid-and-late September as demand starts going down more noticeably.”

What generally occurs is “prices generally fall in the fall” and “they spring in the spring,” he stated.

“Again, that could be subject to change depending on geopolitical tensions and other issues that could affect supply or demand.”

Julia Marnin is a McClatchy National Real-Time reporter protecting the southeast and northeast whilst primarily based in New York. She’s an alumna of The College of New Jersey and joined McClatchy in 2021. Previously, she’s written for Newsweek, Modern Luxury, Gannett and extra.




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