• 4 minutes "Natural Gas Trading Picks Up Considerably Amid High Volatility" by Charles Kennedy - ...And is U.S. NatGas Futures dramatically overbought at the $6.35 range?
  • 8 minutes How Far Have We Really Gotten With Alternative Energy
  • 12 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 42 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 22 hours What China is Learning from Russia's War in Ukraine and its Consequences
  • 1 hour Natural Gas is the Cleanest and most Likely Source of Energy to Fuel the World.
  • 4 days Revisiting: "The U.S. Grid Isn’t Ready For A Major Shift To Renewables" from March 2021 by Irina Slav at OILPRICE
  • 3 days Failure To Implement Russian Oil Ban Could Send Oil Crashing To $65
  • 8 hours Advancing Fundamental Drilling Science - Geothermal drilling successes offer potential gain for petroleum industry
  • 7 hours "Russia will stop 'in a moment' if Ukraine meets terms - Kremlin" by Reuters via Yahoo News...but Reuters suddenly cut out the balanced part of the story.
Truckers Are Facing An Existential Crisis As Fuel Prices Soar

Truckers Are Facing An Existential Crisis As Fuel Prices Soar

Owner-operators in the transportation industry…

U.S. Gas Production Slows At The Worst Possible Time

U.S. Gas Production Slows At The Worst Possible Time

Pipeline shortages in some of…

Robert Rapier

Robert Rapier

More Info

Premium Content

Gasoline Prices May Have Finally Peaked

  • Russia’s invasion of Ukraine sparked a significant increase in oil prices, and by extension, gasoline prices.
  • As summer nears, refiners are switching over to more expensive blends mandated to lower vapor pressure and minimize smog formation.
  • High gasoline prices may persist through summer, but autumn could bring some significant relief for consumers at the pump.

Following Russia’s invasion of Ukraine and the subsequent sanctions on Russian oil, the price of crude oil rapidly climbed above $120 a barrel. Gasoline prices — which had already been climbing since bottoming out in April 2020 — rapidly followed. For the week ending March 14, 2022, the Energy Information Administration (EIA) reported a weekly retail average gasoline prices across all grades of $4.41 a gallon. That was the highest weekly average ever reported by the EIA (but it isn’t adjusted for inflation). Previously the highest weekly average reported took place in July 2008, when crude oil prices reached nearly $150 a barrel.

However, since reaching $4.41/gal, the national average dropped to about $4.20/gal as oil prices pulled back to ~$100/bbl. Barring a new geopolitical event that impacts the oil markets, it seems likely that the price of gasoline will remain below that March peak for now. 

That doesn’t mean we will see significant relief any time soon. Refiners are currently switching over to the more expensive summer blends. These blends are mandated to have lower vapor pressure to help minimize smog formation in the summer. But, they are more expensive to produce, and the supply of ingredients to produce summer gasoline is less than for winter gasoline.

This all coincides with peak driving season. That’s why we rarely see significant drops in the price of gasoline in the summer. The only thing I can imagine that could make this happen is if Russia withdraws from Ukraine in the near future and some of the sanctions on Russian oil are dropped.

Related: U.S. Shale Swings From Losses To Record Cash Flows

In the slightly longer term, however, the situation looks a lot better. U.S. oil production continues to climb. This past week U.S. oil production reached 11.6 million BPD, up 1 million BPD from a year ago and up 600,000 BPD since January. If we can maintain that pace for another year, the U.S. will be back at record levels of oil production.

The number of rigs drilling for oil reached 552 this past week (source), which is up 210 rigs from a year ago. That represents a year-over-year increase of 61%, and is the highest level of drilling since the Covid-19 pandemic took hold in the U.S.

Taken altogether, these signs point to the likelihood of much lower gasoline prices later this year. But you are probably going to have wait until after summer.

By Robert Rapier 

More Top Reads from Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • James Hilden-Minton on May 10 2022 said:
    Demand for motor fuels have also peaked. Sales of new gas- and diesel-powered vehicles have been insufficient since 2019 to sustain fuel consumption of the fleet.

    Last year, of 81M autos sold 6.75M were EVs and 74.6 were ICE (including non-plugin hybrid). About 83M ICE were required to sustain fuel consumption.

    It is unlikely that automakers will make enough ICE auto to rectify the problem. Meanwhile, EVs are pushing to 24% of the Chinese market and 13% of the global market. Supply chain issues and looming recession also are headwinds for auto demand.

    In short, peak oil demand happened in 2019. The auto industry is unable to prop up fuel demand. High prices for gasoline are only making the demand problem worse.

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News