A fuel forecast from GasBuddy predicts gasoline prices will reverse their downward drift and rise next year, potentially jumping as high as $4.13 per gallon in June, although a likely bump in crude supply is expected to push prices lower by the end of 2022.
GasBuddy’s 2022 Gasoline Forecast (pdf), released Dec. 29, predicts that the national retail gasoline price will average $3.41 per gallon for all of 2022—assuming no significant interruptions to the ongoing economic recovery.
“While Americans are likely to see higher prices in 2022, it’s a sign that the economy continues to recover from COVID-19,” GasBuddy head petroleum analyst Patrick De Haan wrote in the forecast.
National gas price averages will peak in spring, ranging from $3.52 to $4.06 per gallon in May and from $3.43 to $4.13 per gallon in June, according to the forecast.
“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,” De Haan said, adding that the forecast is subject to higher uncertainty due to the pandemic, “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.”
National average 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.
EIA’s price projections are lower than GasBuddy’s prediction of a monthly average of $3.27 per gallon in January and $3.41 per gallon for the whole year.
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, like De Haan, believes the falling gas price trend has reversed.
“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 AAA stated in a Dec. 27 note that crude price volatility has kept pump prices from falling more than they have, even as EIA data from the prior week showed a jump in domestic gasoline stocks along with a drop in demand.
“Typically, falling demand and increased supply would support larger 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 association stated.
While gasoline prices have eased recently, they remain far above the year-ago national average of $2.250 per gallon. On Dec. 29, gas prices stood at $3.28 per gallon, around 11 cents lower than a month ago, according to the AAA.
High gas prices have played a major role in pushing up the rate of inflation, which hit a multi-decade high of 6.8 percent in the 12 months through November. They’ve also posed a political problem for the Biden administration, which has sought to cool pump prices by first pleading with OPEC to boost production and later releasing crude from the U.S. national strategic stockpile.
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.