California drivers are saddled with the nation’s most expensive gasoline, paying an average of $6.06 a gallon as of Thursday. That could soon be the fate of drivers in the rest of the country, 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, already a record, according to AAA.
Consumers are already spending thousands more each year on gasoline due to soaring prices at the pump, with the typical household now spending $4,800 annualized on gasoline – a 70% jump from a year ago ,to Wall Street economist Ed Yardeni.
But more pain could be in store for drivers as the summer travel season kicks off, according to JPMorgan commodities analyst Natasha Kaneva, who predicts a “cruel summer” ahead.
“With expectations of strong motor demand – traditionally the summer driving season in the United States begins on Memorial Day, which this year lands on May 30 and lasts until Labor Day in early September – the retail price US could rise another 37% by August to reach $6.20/gallon national average,” she wrote in her May 17 research note.
The reason Kaneva expects fuel costs to continue to rise: lower supply and higher demand. Refineries generally produce more gas in anticipation of a resumption of driving during the summer. But U.S. gas inventories are falling and are now at their lowest seasonal levels since 2019, she noted.
“Gasoline balance sheets on the East Coast have been even tighter, reaching their lowest levels since 2011,” Kaneva said.
The reason for the reduction in gas stocks is an increase in exports, mainly to Mexico and Latin America, she said. If this continues, “gasoline inventories could continue to reach levels well below 2008 lows, and retail gasoline prices could climb to $6 a gallon or even higher,” Kaneva said.
The United States is expected to produce about 9.1 million barrels per day of gasoline this summer, via refineries and imports, but demand is expected to climb to 9.7 million barrels per day by August, which means stocks are expected to decline further. The result will be average gas prices of $6.20 a gallon, she noted.
Admittedly, Kaneva’s predictions are only a view of how the market will evolve, and they hinge on the typical summer tendency of Americans to get behind the wheel for vacations and road trips. Motorists hurt by soaring fuel prices could reduce their driving, dampening fuel demand.
Other analysts, such as GasBuddy oil analyst Patrick De Haan, said they don’t see gasoline prices hitting $6 nationwide.
“It’s *not* a guarantee,” De Haan wrote on Twitter late Wednesday, referring to Kaneva’s forecast. “I personally just don’t see the stars aligning to see the national average reach the $6/gallon level. However, there is little margin for error. $5 is a strong possibility. But $6 Not impossible. But unlikely. For now.”