Gas could reach $ 6.20 a gallon this summer, analysts warn. When will the price fall?

On Friday, the national average for a gallon of gas swelled to $ 4.59, according to AAA. That’s about a quarter more than the previous all-time high of $ 4.33, reached on March 11, and a jump of 50 cents just a month ago.

AAA spokesman Andrew Gross blamed the high price of crude oil, which is close to $ 110 a barrel.

“Even the annual seasonal decline in gasoline demand during the lull between spring break and Remembrance Day, which would normally help lower prices, has no effect this year,” Gross said in a statement.

As we head into the summer, analysts predict even higher pump prices: according to a JPMorgan report, the national average could exceed $ 6.20 a gallon by August. Currently, only California has crossed the $ 6 thresholdthe national average is $ 6.06.

Here’s what you need to know about gasoline prices, including how high they could get, what the White House is doing to change things, and how you can save money on gas.

Why is gas so expensive?

The price of gas is inextricably linked to the price of the crude oil from which it is refined. The price of a barrel of crude oil increases every $ 10 adds almost a quarter at the price of a gallon of the pump.

As part of ongoing sanctions over the invasion of Ukraine, President Joe Biden has announced ban on imports of Russian oil. Although the United States does not import much crude oil from Russia, oil is traded on the global market and every wave affects world prices.

When the European Union pointed out last week he proposed stopping Russian oilcrude oil prices jumped and West Texas Intermediate, one of the world’s leading oil indicators, exceeded $ 110 a barrel.

But Troy Vincent, a senior market analyst at energy analytics firm DTN, says war in Ukraine it is not the only factor causing rising fuel prices: gas demand fell during the pandemic, prompting oil producers to shut down production.

Although demand is approaching pre-pandemic levels, producers are still afraid of increasing production. In April, OPEC did not reach its target increase in production with 2.7 million barrels per day.

“We have had an imbalance in supply and demand for some time,” Vincent told CNET. “And it will remain, whether or not this conflict disappears,” he said.

In addition, gas companies have switched to the more expensive summer gasoline blend, which can add between seven and ten cents a gallon. During the warmer months, gasoline is reformulated to prevent excessive evaporation caused by higher temperatures outside.

How much will gas prices rise?

Although the current $ 4.59 per gallon is a record amount in dollars, adjusted for inflation is still below the 2008 peak of $ 4.14. But experts do not believe that we have seen the end of the rise in pump prices.

“This dynamics of supply and demand, combined with fluctuating crude oil prices, is likely to continue to keep upward pressure on pump prices,” AAA said. said in a statement Thursday.

Matt Smith, data analyst at Kpler, he said USA Today that the average value of $ 5 per gallon “is by no means out of reach.”

“Gasoline prices will remain high while oil prices remain in the triple digits,” Smith said. – It will hit your pocket much harder.

With expectations of a “strong demand for driving” during the summer driving season from Remembrance Day to Labor Day, JPMorgan analysts predicted that the price could exceed $ 6 per gallon before the fall. The price of a gallon could jump another 37% by August to a national average of $ 6.20 a gallon, said Natasha Kaneva, head of commodity research at JPMorgan, in a note Tuesday, Insider reported.

Refineries usually increase production in the spring in anticipation of greater demand in the summer, Kaneva said. But gasoline inventories have actually fallen to their lowest seasonal levels since 2019, in part because gas companies underestimate how quickly demand will recover from the pandemic’s low levels.

This week, Los Angeles joined San Francisco in overcoming the $ 6 a gallon barrier. And for the first time, the average price per gallon exceeded $ 4 in all 50 states.

What is the government doing to reduce gas prices?

In late March, Biden announced that it would release one million barrels of oil a day from the US Strategic Oil Reserve over the next six months. According to the White House, the unprecedented withdrawal could lower gasoline prices by between 10 and 35 cents a gallon.

But insiders say it probably won’t help much in the long run.

“This will lower the price of oil a little and boost more demand,” said Scott Sheffield, chief executive of Texas oil company Pioneer Natural Resources. told The New York Times. “But it’s still a band-aid with a significant supply shortage.”

In April, the Environmental Protection Agency approved year-round sales of cheaper E15 gasoline, which contains a 15% ethanol blend. The impact will be modest, as only about 2,500 of the more than 100,000 petrol stations across the country sell a mixture with a higher ethanol content.

The White House continues to put pressure on US oil companies to increase drilling and production. Criticizing energy concerns about “sitting on” more than 12 million acres of federal land and 9,000 approved production permits, the administration would like companies to be fined for leaving wells rented from public lands unused.

In May, the Department of the Interior canceled the sale of a high-ranking oil and gas lease that would open 1 million acres in Alaska for drilling, citing “a lack of industry interest in leasing in the area.” according to CBS News. The department also suspended two potential leases in the Gulf of Mexico for what it called “controversial court decisions that have affected the work on these proposed leases.”

The government is also looking for energy products from other sources: the Biden administration was works to improve diplomatic relations with Venezuela, which has been banned from selling U.S. oil since 2018 and is negotiating another non-proliferation treaty with Iran that will return Iranian oil to the market.

There is also a bill in Congress that will pause the federal fuel tax, although it faces fierce opposition. Separately, Connecticut, Maryland and Georgia state gas taxes stopped to help consumers, and at least 20 other states are considering similar moves.

How can drivers save at the gas station?

There is not much we can do to change the price of petrol, but drivers can reduce unnecessary travel and shop at the best price, even crossing national borders if it is not inconvenient.

Applications such as Gas guru scan for the best gas prices in your area. Others, such as FuelLog, track the mileage of your car’s gasoline and can help you determine if there is a decent fuel economy. In addition, many gas station chains have loyalty programs and credit cards have reward programs who return money for gas purchases.

Vincent of DTN advises against accumulating gas or other extreme measures, but encourages budgeting for more gas. High energy prices have been a major contributor to inflation for some time, he said, and will not go away immediately.

“When the price of crude oil rises, pump prices tend to reflect very quickly,” he said. “But gas prices tend to linger longer, even when crude oil falls.”