Gasoline prices have remained unattractively high across much of the United States in the latter half of 2021, and a new study reveals that one U.S. state may see gasoline prices near $6.
According to a new study published by GasBuddy this week, gasoline prices could reach $6 per gallon in San Fransisco, with Los Angelos and Sacramento reaching $5.50 per gallon. For some cities in California, this would be the highest nominal average ever paid.
Currently, the price of a gallon of gasoline in California is $4.65, according to AAA, compared to the national average of $3.285 per gallon. California is notorious for having some of the highest gasoline prices in the nation, and it looks like they will be keeping this distinction into the new year.
For 2022, GasBuddy is predicting a rise of nearly 40 cents per gallon, to $3.41 per gallon—with $4 per gallon a real possibility by springtime, and $4.13 by June before slacking off post-summer to just under $3.
Overall, the high gasoline prices expected in 2022 could mean that the average consumer would spend $2,341 over the course of the year on gasoline, compared to just $1,971 spent this year—the most spent on gas since 2014, GasBuddy claims.
This will bring the nation’s yearly gasoline bill to $485 billion—up $80 billion from 2021.
“While Americans are likely to see higher prices in 2022, it’s a sign that the economy continues to recover from Covid-19. The higher prices go, the stronger the economy is. No one would love to see $4 per gallon gasoline, but we’ll only get there on the back of a very strong economy, so it’s not necessarily bad news. There remains higher uncertainty than in a non-Covid year, but all signs point to gas prices remaining elevated next year until the high prices attract additional oil supply, which will help prices cool off as we end 2022,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
The higher gasoline prices will come on the back of gasoline and crude oil demand that has come roaring back after the pandemic, while supply has yet to catch up.
Crude oil production in the United States—which currently stands at 11.8 million barrels per day—is still lagging pre-pandemic levels by about 1.3 million bpd. As a result, crude oil inventories have shed some 70 million barrels over the course of 2021, which has supported prices.
Higher gasoline prices have troubled the Biden Administration for much of 2021, with President Biden moving to release millions of barrels of crude oil from the Strategic Petroleum Reserves in an effort to bring down prices. The Administration has also called on OPEC+ to increase the group’s oil production—but those calls were essentially ignored.
Despite the recent surge in demand, GasBuddy showed that US gasoline demand has been “incredibly weak” this week, with the week over week change -13.7% as of Wednesday.
By Julianne Geiger for Oilprice.com
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