Gas Prices Could Exceed $4 Average in 2022: GasBuddy

Gas Prices Could Exceed $4 Average in 2022: GasBuddy traffic in front of gas station (JIM WATSON/AFP via Getty Images)

By Charlie McCarthy | Tuesday, 28 December 2021 11:16 AM

Gas prices could exceed a $4 average before the summer, predicted.

The GasBuddy forecast projects gas prices will peak nationally at an average of $3.79 in May, before retreating below current levels by late 2022, CNN reported.

"We could see a national average that flirts with, or in a worst-case scenario, potentially exceeds $4 a gallon," Patrick De Haan, head of petroleum analysis at GasBuddy, told CNN.

GasBuddy's forecast also predicts the national gas price average will rise to $3.41 per gallon next year, up from $3.02 in 2021.

The predicted rise in gas prices would magnify inflationary pressures hitting U.S. families. Consumer prices rose 5.7% over the past year, the fastest pace in 39 years.

GasBuddy based its forecast on several major factors, including demand that continues to recover from COVID much faster than supply.

"The economy is hot. Demand has come roaring back. But supply is still catching up after getting cut greatly in 2020," De Haan said, CNN reported.

OPEC and its allies implemented unprecedented production cuts in the spring of 2020 after oil prices crashed below zero for the first time ever, CNN reported. U.S. oil companies also cut production.

Another factor in gas prices is that key refineries have been sidelined in recent years. Low prices when the pandemic began forced closures of locations that produce gasoline, jet fuel, and diesel fuel.

Also, a refinery in Louisiana was damaged by Hurricane Ida in August, and the ExxonMobil plant in Baytown, Texas, last week was rocked by an explosion that injured at least four workers.

Tom Kloza, chief oil analyst for the Oil Price Information Service, told CNN the Baytown refinery accident could weigh on already-constrained gasoline supply. Kloza added he would not be surprised to see average prices rise to $4 a gallon in much of the country this spring and summer.

"There is less breathing room as a result of those refinery shutdowns," De Haan said, CNN reported.

The national average at the pump fell to $3.29 per gallon on Monday, according to AAA. That's down 13 cents from the peak of $3.42 on Nov. 8.

The average U.S. price of regular-grade gasoline dropped by 6 cents over the previous two weeks to $3.41 per gallon, industry analyst Trilby Lundberg of the Lundberg Survey said Dec. 19. Falling prices were due to lower crude oil costs.

U.S. implied consumer petroleum demand surged to an all-time high on the back of holiday demand and travel — even as the omicron variant of coronavirus threatens to dent oil consumption in coming months — the U.S. Energy Information Administration said Dec. 15.