OPINION: This article contains commentary which may reflect the author's opinion
GasBuddy predicts that gas prices will rise next year, potentially reaching $4.13 per gallon in June, although increases in crude supply are forecast to push prices lower by the end of 2022.
Based on GasBuddy’s 2022 Gasoline Forecast (pdf), released on December 29, national retail gasoline prices will average $3.41 per gallon over the course of 2022 if the economic recovery does not undergo significant interruptions.
“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.
According to forecasts, pump prices will peak in spring, ranging between $3.52 and $4.06 per gallon in May and between $3.43 and $4.13 in June.
“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.”
According to the Energy Information Administration (EIA), national average gasoline prices have been on a downward trend since peaking last week at $3.505.
National average retail gasoline prices fell to $3.375 per gallon during the week ended Dec. 27. The EPA predicted in early December that prices would drop to $3.01 per gallon in January and average $2.88 per gallon in 2022.
According to GasBuddy, the price for gasoline will be $3.27 per gallon in January and $3.41 for the whole year, which is lower than the EIA’s forecast.
In a Dec. 27 Twitter post, Tom Kloza, global head of energy analysis at IHS Markit, said he agrees with De Haan that energy prices are turning upwards.
“Cash prices for gasoline up 4cts (East of Rockies) to as much as 16cts gal (PNW). The downward trend in pump prices is likely over,” Kloza wrote.
While domestic gasoline stocks jumped last week, EIA data from the prior week showed a drop in demand for gas, according to AAA’s Dec. 27 report.
“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 AAA stated.
Despite a recent drop in gasoline prices, they are still well above the national average of $2.250 per gallon from last year. According to the AAA, gas prices stood at $3.28 per gallon on Dec. 29, around 11 cents lower than they were a month earlier.
In the 12-month period through November, inflation reached a multi-decade high of 6.8 percent due in large part to high gas prices. In addition, they have created a political headache for the Biden administration, which has sought to cool pump prices by appealing first to OPEC to boost production, then by releasing crude from the U.S. national strategic stockpile.
President Joe Biden has been criticized for relying on OPEC to boost supply rather than boosting domestic oil production to counter higher prices at the pump.