Along with the cost of groceries, laundry detergent and breakfast, gas prices appear to be trending in a painful, upward direction in 2022.
Earlier this week, Goldman Sachs analysts said that oil could rise over $10 to $100 a barrel later this year, and go even higher in 2023.
The investment bank based its projections in part on a “surprisingly large” supply deficit despite the spike in COVID-19 cases.
Also looming over future fuel prices is a possible Russian invasion of Ukraine, which President Joe Biden predicted during his address Wednesday. A military incursion by one of the world’s top oil producers could result in sanctions from the US and would have major implications on gas prices. International Energy Agency Executive Director Fatih Birol blamed Russia earlier this month for a natural gas crisis in Europe that has left countries with skyrocketing prices and low supply.
So is it time for Americans to rush to the pump before prices skyrocket? Not just yet, as Goldman expects gas to hit the $100 mark in the third quarter of this year.
GasBuddy’s lead petroleum analyst, Patrick De Haan, says this time of year is usually more tame with prices jumping up in March, April and May. Thursday’s national average for regular gas was $3.32, up more than $1 from last January, according to AAA, and prices could continue to rise substantially throughout the rest of the year.
When factoring in the current geopolitical instability, “we could see the national average climbing close to $4 per gallon by the time we get out to celebrate Memorial Day,” De Haan told CNN Thursday.
It’s worth keeping an eye on the price of oil this winter and spring as it is a main ingredient in gas and a leading indicator of pump prices.
“If the price of oil was to jump $20 a barrel today, [gas] stations may look to pass it along as quick as possible because it’s so significant,” De Haan told Nexstar. “But generally it takes a few days for oil prices to pick up steam. Gas stations are probably not able to successfully pass along [oil price increases] for at least a day.”
De Haan projects that there will be relief at the pump, but it will likely take at least the rest of the year for the pandemic-suppressed oil supply to catch up with demand, ultimately bringing down prices.
He added that producers eager to take advantage of the rising price of oil will ultimately pump out more, and “that will eventually lead to a return to some of the prices we’re more used to seeing, but it will take time to get there.”