The falling trend in retail gasoline prices has likely hit bottom and drivers should expect a fresh run of higher prices before seeing relief at the pump again, according to several industry experts, with one predicting a peak as high as $4 per gallon by spring.
National average retail gasoline prices have been in a downward trend since peaking at $3.505 for the week ending Nov. 8, according to the Energy Information Administration (EIA). The week ending Dec. 27 saw the national average fall to $3.375 per gallon, with the agency predicting in early December that prices would drop to $3.01 per gallon in January and average $2.88 per gallon in 2022.
But GasBuddy head petroleum analyst Patrick De Haan believes the falling trend has reversed.
“With oil back to $76/bbl, it’s becoming more clear that our month-long run with falling #gasprices is likely coming to an end,” De Haan said in a tweet. “Expect a spike soon in the Great Lakes, which could push the national average up a few cents soon. West Coast could see some increases soon too.”
Separately, De Haan told CNN that his modeling indicates the national average gas price is likely to rise to $3.41 per gallon for all of 2022, with a peak in May that could go as high as $4 before edging down again.
“We could see a national average that flirts with, or in a worst-case scenario, potentially exceeds $4 a gallon,” De Haan told the outlet.
His remarks build on statements he made a day prior when he predicted that an uptick in the price of wholesale gasoline was squeezing profits at stations in several states, “triggering a likely hike soon.”
“Expecting a hike soon in #gasprices in Michigan, Indiana, Ohio, and areas of Kentucky and Illinois as soon as tomorrow as retail gas prices are now at/below margin in many of these areas,” De Haan wrote on Twitter, adding that he expects a jump to between $3.09 and $3.25 per gallon in Michigan, Indiana, and Ohio, and higher than that in Illinois.
As of Dec. 28, retail regular gasoline prices in the four states in question were: $3.001 in Ohio, $3.089 in Michigan, $3.041 in Indiana, and $3.371 in Illinois, according to AAA.
Tom Kloza, global head of energy analysis at the Oil Price Information Service at IHS Markit said in a Dec. 27 Twitter post that he, too, believes the falling gas price trend is over—at least for now.
“Cash prices for gasoline up 4cts (East of Rockies) to as much as 16cts gal (PNW). Downtrend in retail pump prices probably over for now,” Kloza wrote.
The pace of gas price declines has slowed in line with a reduction in demand, AAA stated last week, while noting that a potential uptick in crude prices would likely trigger higher prices at the pump.
“Typically, falling demand and increased supply would support higher drops in pump prices, but fluctuations in the price of crude oil have helped to keep pump prices elevated. If crude prices continue to climb, pump prices will likely follow suit,” the agency stated.
Elevated gas prices have been one of the faces of the broader inflationary trend, frustrating drivers and becoming a political problem for the Biden administration, which announced the week of Thanksgiving that it would release crude from the national strategic stockpile in a bid to cool pump prices.
While gasoline prices have eased recently, they remain far above the year-ago national average of $2.252 per gallon.
Republicans have criticized President Joe Biden for relying on OPEC to ramp up supply to counter higher prices at the pump, rather than boosting domestic oil production.
After taking office in January, Biden signed executive orders that shut down construction of the Keystone XL pipeline, which would have been able to transport oil into the United States from oilfields in Alberta, Canada. The administration also put a freeze on some new drilling sites.
Fuel prices are one of the major factors pushing up inflation in the United States, which soared to a multi-decade high in November.