Patrick De Haan, head of petroleum analysis at GasBuddy, warned on Thursday that gas prices in 2022 will be “front and loaded,” noting that the highest gas prices “will be in the first half of the year.”
Fuel projections from GasBuddy indicate that $4 per gallon as a national average is a real possibility for 2022.
De Haan told “Varney & Co.” on Thursday that California could experience a state average price of more than $5 for gas.
The fuel savings platform predicts that a national average of $4 per gallon is possible by the spring on account of pandemic recovery and rising demand before relief or additional oil supply arrives later in 2022.
De Haan said that he believes that prices will get lower as the year ends, but warned that, still, at the end of 2022 prices “may not get under that $3 mark.”
On Thursday, the national average for gas was $3.29, which is 11 cents lower than the month before and $1.03 more than the same time last year, according to AAA.
The association noted in a news release that the recent steady decline in gas prices has slowed due to a fire at a major oil refinery last week. Four people were injured when a fire erupted at the Exxon Mobil Corp refinery in Baytown, Texas, last Thursday, which is one of the largest refining and petrochemical facilities in the country.
Still, oil traded on Thursday around the $76 per barrel mark, and De Haan warned that the price of oil “continues to go up.” \
“Omicron is less severe than anticipated and that will likely boost demand further along in 2022,” he said.
He noted that, moving forward, the “problem” will be refining capacity and that it can’t be resolved quickly.
“Refineries have modernized in recent years, but the economics are not getting any better,” De Haan said. “With the administration’s clear move away from fossil fuels, you wonder if there will be much investment in the U.S. in refining capacity.”
“I think most of the refining capacity that we see added will probably be in the Middle East or Asia in coming years, so this is a problem that in the spring could result in gas prices reaching that $4 dollar mark,” he continued.
President Biden revoked the permit for the Keystone XL oil pipeline project on his first day in office in a series of orders aimed at combating climate change, ending a project that was expected to employ more than 11,000 Americans this year.
Biden also temporarily suspended the issuance of oil and gas permits on federal lands and waters.
“The average household this year [is] going to spend nearly $2,400 on gasoline,” De Haan said on Thursday, noting that the price “hasn’t been that high since 2014.”
“Higher gas prices are likely to stick around this year,” he stressed.
De Haan provided the insight as consumer prices have surged at the fastest pace in nearly four decades in November as Americans paid more for practically everything from groceries to cars to gasoline.
The consumer price index rose 6.8% in November from a year ago, according to a Labor Department report, marking the fastest increase since June 1982, when inflation hit 7.1%. The CPI – which measures a bevy of goods ranging from gasoline and health care to groceries and rents – jumped 0.8% in the one-month period from October.
Price increases were widespread with energy prices jumping 3.5% in November, up 33.3% year over year. Gasoline is a stunning 58.1% higher than it was a year ago.