‘Cruel summer’: Gasoline could hit $6.20 a gallon nationally in August, analyst predicts

California drivers are dealing with some of the most expensive gasoline in the country, spending an average of $6.06 per gallon as of Thursday. That could soon be the fate of drivers in the rest of the nation, 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, which is already a record, according to AAA.

Consumers are already spending thousands of dollars more each year on gasoline due to rising prices at the pump, with the typical household now spending $4,800 annually on gasoline, a 70% increase from the previous year. according to Wall Street economist Ed Yardeni.

But there could be more pain in store for drivers as the summer travel season kicks off, according to Natasha Kaneva, a commodities analyst at JPMorgan, who predicts a “cruel summer” ahead.

“With expectations of strong driving demand, the US summer driving season traditionally begins on Memorial Day, which this year ends May 30, and lasts through Labor Day in early September, the US retail price could rise another 37% in August to $6.20/gallon national average,” he wrote in his May 17 research note.

The reason Kaneva expects fuel costs to keep rising: lower supply and higher demand. Refineries typically produce more gasoline in anticipation of increased summer driving. But gas inventories in the US are falling and are now at their lowest seasonal levels since 2019, he noted.

“Gasoline balances on the East Coast have been even tighter, hitting their lowest levels since 2011,” Kaneva said.

The reason for the reduction in gas inventories is an increase in exports, mainly to Mexico and Latin America, he said. If that continues, “gasoline inventories could continue to approach levels well below the 2008 lows, and retail gas prices could rise to $6/gallon or even higher,” Kaneva said.


Gas prices in Los Angeles County hit another record

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The US is projected to produce about 9.1 million barrels per day of gasoline this summer, through refineries and imports, but demand is expected to rise to 9.7 million barrels per day in August, which which means that inventories are likely to be further reduced. The result will be average gasoline prices of $6.20 a gallon, he noted.

To be sure, Kaneva’s forecast is just a glimpse of where the market is headed, and hinges on the typical summer trend of Americans getting behind the wheel for vacations and road trips. Motorists aggrieved by skyrocketing fuel prices could cut back on driving, curbing demand for fuel.

Other analysts, such as GasBuddy oil analyst Patrick De Haan, said they don’t see gas prices reaching $6 nationally.

“This is *not* a guarantee,” De Haan wrote on Twitter Wednesday night, referring to Kaneva’s forecast. “Personally, I just don’t see the stars aligning to see the national average hit the $6 per gallon level. There’s little room for error, though. $5 is a strong possibility. But $6? Not impossible. But unlikely.” . For now .”

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