Drivers in California are grappling with the most expensive gas in the nation, paying an average of $6.06 a gallon as of Thursday. That could soon be the fate of drivers in the rest of the country, according to a JPMorgan analyst, who predicts the national average price per gallon could hit $6.20 this summer.
That would represent an increase of more than 30% from the current national average of $4.59 per gallon, already a record high, according to AAA.
Consumers are already spending thousands more a year on gasoline due to the surge in prices at the pump, while the average household now spends $4,800 annually on gas — a 70% jump from a year ago. according to to Wall Street economist Ed Yardeni.
But according to JPMorgan commodities analyst Natasha Kaneva, who predicts a “cruel summer,” more pain could come for drivers as the summer travel season kicks off.
“With demand expected to pick up sharply — traditionally the US summer season begins on Memorial Day, which falls on May 30 this year and lasts through Labor Day in early September — US retail price could rise another 37% to USD$$3 in August. 6.20./gallon national average,” she wrote in her May 17 research paper.
The reason Kaneva expects fuel costs to continue to rise: less supply and more demand. Refineries usually produce more gas in anticipation of an uptick when running in the summer. But US gas supplies are falling and are now at their lowest seasonal level since 2019, she noted.
“Gas balances on the East Coast are even tighter, falling to the lowest level since 2011,” Kaneva said.
The reason for the decline in gas supplies is an increase in exports, especially to Mexico and Latin America, she said. If that continues, “gasoline inventories could continue to fall well below their 2008 lows and retail gasoline prices could rise to $6/gallon or even higher,” Kaneva said.
The US is expected to produce about 9.1 million barrels of gasoline per day this summer, through refineries and imports, but demand is expected to climb to 9.7 million barrels per day in August – meaning inventories are likely to increase even more. to decrease. The result is average gas prices of $6.20 a gallon, she noted.
To be sure, Kaneva’s forecast is just one picture of where the market is headed, and it relies on the quintessential summer trend of Americans getting behind the wheel for vacations and road trips. Drivers disadvantaged by skyrocketing fuel prices may drive less, thereby curbing fuel demand.
Other analysts, such as GasBuddy’s petroleum analyst Patrick De Haan, said they don’t see gas prices rising to $6 nationally.
“This is *no* guarantee,” De Haan wrote on Twitter on Wednesday evening, referring to Kaneva’s prediction. “Personally, I just don’t see the stars aligning to see the national average hit the $6/gallon level. However, there’s very little margin for error. $5 is a strong possibility. But $6? Not impossible. But unlikely. . For now .”
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