$4 gas could be here by Memorial Day, GasBuddy predicts

[teamgreen02]

A year ago oil was at $51.64 per barrel.  Today it is trading at $87.11. 

The only way out of this is for domestic producers to kick production in high gear.  550 drill rigs operating in North America last year and it's up to 816 today.

https://www.cnn.com/2021/12/28/business/gas-prices-inflation/index.html

New York (CNN Business)Pain at the pump will get worse before it gets better.

That's according to a new GasBuddy forecast that predicts the national average will rise to $3.41 a gallon in 2022, up from $3.02 a gallon this year.

That would reverse some of the recent relief American drivers have received as gas prices have slowly backed away from seven-year highs.

 

The GasBuddy forecast, shared exclusively with CNN, projects prices at the pump will peak nationally at a monthly average of $3.79 in May, before finally retreating below current levels by late 2022.

"We could see a national average that flirts with, or in a worst-case scenario, potentially exceeds $4 a gallon," said Patrick De Haan, head of petroleum analysis at GasBuddy, an app that tracks fuel prices, demand and outages.

That would amplify the inflationary pressures hitting American families grappling with the biggest price spikes in nearly 40 years. And it would add to the White House's political headaches.

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

The call for gas prices to rise further in the coming months stands in contrast with forecasts from the government and some, though not all, on Wall Street.

 

The US Energy Information Administration said on December 7 the national average will likely drop to $3.01 a gallon in January and fall to $2.88 for 2022. Citigroup likewise predicted a "radical drop" in energy prices, including a potential bear market for oil next year.

'The economy is hot.'

GasBuddy is basing its forecast on several major themes, 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.

OPEC and its allies enacted unprecedented production cuts in the spring of 2020 after oil prices crashed below zero for the first time ever. US oil companies also slashed output.

Despite high prices, neither OPEC+ nor US oil producers have gotten back to pre-Covid production.

Refinery shutdowns are a problem, too

The other major factor is that key refineries have been sidelined in recent years.

Low prices when Covid erupted forced the closure of some refineries, which churn out gasoline, jet fuel and diesel that the economy relies on.

Another refinery in Louisiana was damaged by Hurricane Ida in August, prompting Phillips 66 to convert the facility into an oil terminal instead.

And then last week one of America's largest refineries, the ExxonMobil plant in Baytown, Texas, was rocked by an explosion that injured at least four workers.

 

Her kids will be getting smaller gifts this year. The rest of the family won't get any at all

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

Refinery capacity fell to a six-year low in 2021, according to the EIA. De Haan, the GasBuddy analyst, said the demise of multiple refineries has contributed to the higher price outlook.

"There is less breathing room as a result of those refinery shutdowns," he said.

'Anything could change'

The good news is GasBuddy does not anticipate the spring surge in gas prices will last.

The forecast calls for gas prices to stay elevated at $3.78 a gallon in June and $3.57 in July but then falling sharply as demand cools off. By December, GasBuddy expects gas prices will average $3.01 a gallon nationally, which is below current levels.

Of course, no one can say with certainty where gas prices will go next. Covid has made it very difficult to accurately forecast much about today's economy.

Although GasBuddy's prior forecasts were reasonably close to where prices ended up, the company did not see the 2021 surge coming.

De Haan concedes there is a lot of uncertainty today, especially on the Covid front.

"Anything could change," he said. "Tomorrow there could be a ridiculous variant and prices could plummet."

Biden's historic intervention

Nonetheless, the specter of $4-a-gallon gas will only intensify the political debate around high gas prices.

Republicans have sought to blame President Joe Biden for the energy sticker shock, pointing to his ambitious climate agenda.

Biden stepped into the fray in November by forming a coalition of energy consuming nations to intervene in the oil market. The White House announced the largest-ever release of barrels from the Strategic Petroleum Reserve and persuaded China, India, South Korea and other nations to join in.

Rumors of an intervention drove oil prices about 10% lower prior to the SPR announcement, though experts doubted the move would provide lasting relief to energy prices. And then Omicron emerged, briefly sending oil prices crashing, before they rebounded somewhat.

 

Emilie Simons, a White House spokesperson, pointed out that 21 states have average gas prices below $3.15 a gallon, putting them below the 20-year real average.

"While current price levels aren't unprecedented," Simons told CNN in an email, "the President believes that they are too high especially given that we are emerging from a once-in-a-century pandemic."

The Keystone Pipeline debate

Biden's critics frequently point to his Day One decision to rescind the permit for the Keystone XL Pipeline.

But this pipeline wasn't even scheduled to begin carrying oil until 2023. Even the American Petroleum Institute has conceded Keystone isn't the primary factor behind today's high prices.

"Americans who believe that have been fooled into thinking that a pipeline somehow produces oil. They don't. They merely carry oil," De Haan said.

In any case, about half of US oil pipeline space is unused after years of rapid expansion.

US pipeline capacity is sitting around 50%, compared with a range of 60% to 70% before Covid, according to Wood Mackenzie.

De Haan notes that although the Biden administration issued a drilling moratorium on federal land, that has been blocked in court and the Interior Department has been issuing ample permits recently.

"We'd have seen a surge in gas prices," he said, "no matter who was in the Oval Office."

[awful knawful]

$1.47/L here.

Would welcome $4 with open arms.

 

[teamgreen02]

8 minutes ago, awful knawful said:

$1.47/L here.

Would welcome $4 with open arms.

Vaccine passports and a tyrannical lockdown government should be a bigger concern right now for ya bud.

[spin_dry]

Hopefully it is $4 gallon. Kill off some the assholes in their RV’s. 

[teamgreen02]

2 hours ago, spin_dry said:

Hopefully it is $4 gallon. Kill off some the assholes in their RV’s. 

I agree.  Take the people who worked their entire life to have 5 years to travel around the country and throw it all away due to high energy prices and skyrocketing inflation.

How you liking the emissions system on that modern diesel engine?

[spin_dry]

1 hour ago, teamgreen02 said:

I agree.  Take the people who worked their entire life to have 5 years to travel around the country and throw it all away due to high energy prices and skyrocketing inflation.

How you liking the emissions system on that modern diesel engine?

I doubt that there will be another diesel in my future. Limp mode 4 times during the last 5000 miles. Went into countdown twice. Only a handful of Mercedes dealers work on Sprinters so it' a gamble owning one. Love the rig and how it handles the back country. Looked into a delete, but no reputable tuners will touch a Merc. I listed the rig and sold it within 5 hours for a sizable profit. There's a 18 month backlog on orders. Weighing my options at the moment. More to come.....

[teamgreen02]

39 minutes ago, spin_dry said:

I doubt that there will be another diesel in my future. Limp mode 4 times during the last 5000 miles. Went into countdown twice. Only a handful of Mercedes dealers work on Sprinters so it' a gamble owning one. Love the rig and how it handles the back country. Looked into a delete, but no reputable tuners will touch a Merc. I listed the rig and sold it within 5 hours for a sizable profit. There's a 18 month backlog on orders. Weighing my options at the moment. More to come.....

On a rig that size you are way better off with a gasser.  Cheaper, easier to maintain, and way more reliable.

[spin_dry]

3 minutes ago, teamgreen02 said:

On a rig that size you are way better off with a gasser.  Cheaper, easier to maintain, and way more reliable.

There isn't a modern gas van with the off road capability of a Sprinter. 

[teamgreen02]

4 minutes ago, spin_dry said:

There isn't a modern gas van with the off road capability of a Sprinter. 

Not when it's in limp mode.

[p51mstg]

Thanks, Biden

Trump had his faults, but he understood how the economy works.  The current batch of Democrats have no idea.  They’re trying to force alt energy down our throats with high petroleum prices and it’s choking the economy.  Good job, idiots.

[Rigid1]

10 hours ago, spin_dry said:

I doubt that there will be another diesel in my future. Limp mode 4 times during the last 5000 miles. Went into countdown twice. Only a handful of Mercedes dealers work on Sprinters so it' a gamble owning one. Love the rig and how it handles the back country. Looked into a delete, but no reputable tuners will touch a Merc. I listed the rig and sold it within 5 hours for a sizable profit. There's a 18 month backlog on orders. Weighing my options at the moment. More to come.....

Maybe a gas pick-up with a camper in the bed?? Buddy of mine has one, loves it..Put down the landing gear at the camp site, drive away and you have a normal truck to day trip in..

[Skidooski]

Haven't been doing nearly as much daily driving lately but have seen a bunch of these around here in the past. Local company. Would be interesting to see what they could do with Sprinter or similar for an overlander 

https://www.aev-conversions.com/

[racer254]

let's go brandon

[steve from amherst]

10 hours ago, teamgreen02 said:

On a rig that size you are way better off with a gasser.  Cheaper, easier to maintain, and way more reliable.

My diesel days are over. Have a 15 f-250 . it will be my last deisel

[racer254]

Isn't is hilarious how some people are never wrong...and if they do fuck up, they quit the project early, then blame it on someone or something else.  Typical liberal pos.