After a year of high inflation and market volatility, gasoline prices are set to fall in 2023, although summer travel could still push prices into the $4-a-gallon range as early as May, according to a new forecast. .
GasBuddy, an app that provides real-time information on gas prices, released projections for 2023 on Wednesday that suggest Americans should expect some relief at the pumps early next year. The annual national average price is expected to fall nearly 50 cents per gallon from 2022 to $3.49 cents, the report said.
Fuel prices hit record highs in 2022 due to the lingering effects of COVID-19 policies that shut down crude oil refineries – limiting oil production – and international trade disruptions linked to the Russian invasion of the Ukraine. As the world emerges from the pandemic, global refining capacity is expected to increase, which will mitigate the decline in US gasoline, diesel and jet fuel supply, according to GasBuddy.
Gas is expected to hover around an average low of $3 a gallon in January and February, when demand is seasonally weak. However, in the spring and summer, prices can go up to $4 when drivers hit the road and take advantage of the nice weather. By the end of the year, prices should fall again as demand subsides.
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“2023 will not be a walk in the park for motorists. It could be expensive. The national average could top $4 a gallon as early as May — and that’s something that could last through much of the summer driving season,” said Patrick De Haan, head of petroleum analysis for GasBuddy.
“Basically, curveballs are coming from all directions. Extreme levels of volatility are still possible, but should become slightly more muted over the coming year,” he added. “I don’t think we’ve ever seen such volatility as we’ve seen this year, and it will be a trend that will likely continue to lead to greater fuel price uncertainty well into 2023.”
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Forecasts suggest that most major US cities will see prices peak at around $4 a gallon, but California cities like San Francisco and Los Angeles could repeat their highs of $7 a gallon in the summer of 2023 if refineries are struggling to produce fuel under the state’s restrictive regulatory regime.
Overall, Americans are estimated to spend $470.8 billion on gasoline next year, down $55 billion from 2022. GasBuddy estimates that the average household will spend about $2,471 on gasoline in 2023, saving $277 over this year.
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GasBuddy’s projections mirror those of the Energy Information Administration, which expects retail gasoline prices to average $3.51 per gallon in 2023. The company has an excellent track record of fuel price forecast, with a margin of error of only 0.8% in 2022 after revision. their prospects after the Russian invasion of Ukraine.
Looking ahead, GasBuddy expects markets to calm next year, although the outlook for 2023 recognizes that the economic downturn, unpredictable and unforeseen headwinds facing U.S. refineries and natural disasters due to extreme weather events can each affect retail fuel prices.
“What we saw in 2022 was just madness at the country’s gas pumps, with records seemingly set left and right as COVID imbalances persisted and Russia invaded Ukraine,” he said. De Han. “While lightning is highly unlikely to strike the same location twice, thunderclouds in the oil and refining markets may persist, and there could still be spikes as the market remains somewhat tense.”
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