Despite several media reports last week warning that a shortage of fuel tank truck drivers could cause prices to spike this summer, some noted energy experts say that’s likely to be just a blip.
“I don't think most experts expect that we're going to see a sharp spike in gasoline prices this summer. I wouldn't expect that would be any more than a local annoyance, in some places,” says Jay Hakes, a long-time expert in U.S. energy policy and the author of Energy Crises: Nixon, Ford, Carter, and Hard Choices in the 1970s. “My gut feeling is that that's not going to be a game changer — it's just something to keep an eye on.”
“It is important to understand this is not a market-wide impact. Gas can be found at other stations within a market,” Jeanette McGee, a spokesperson for the American Automobile Association (AAA), said in a statement. “The U.S. is not looking at a gas supply shortage; there is ample gasoline supply across the country. It is just a matter of more frequent deliveries to stations to meet demand.”
Hakes says he doesn’t expect the national average gas price to get anywhere near $4 per gallon this summer, as some news stories have suggested. Still, road trippers should also not expect gas prices to look like 2020. “Gas prices are going to be higher than last year,” he says. “But they're going to be in the range of what they were the two years before Covid.”
Last summer’s average of $2.07 per gallon — the lowest since 2004 — was an anomaly driven by a pandemic that significantly reduced demand for gasoline and other oil consumption, which in term caused a drop in crude oil prices.
“If people look at what they were paying for gasoline last year, it was extraordinarily cheap,” says Hakes, “because we had the biggest drop off in oil demand — probably in history, certainly in modern history — where all of a sudden, within a week or two, people weren't flying and they weren't driving.”
The U.S. Energy Information Administration (EIA), the agency Hakes ran from 1993 to 2000, is the data and analytic arm of the U.S. Department of Energy. The EIA expects that the retail price of regular-grade gasoline in the United States will average $2.78 per gallon during summer 2021.
That’s a bit higher than the $2.60 per gallon average in summer 2019 and the $2.71 average during summer 2018. The higher projection for this summer, explains the EIA’s latest Short-Term Energy Outlook report, can be chalked up in part to higher gasoline refining margins — the difference between the price of wholesale gasoline and Brent crude oil. Those margins are expected to average 45 cents per gallon from April through September, the highest summer average since 2017.
“I think the consensus opinion is that over the summer that the average national price will be under $3 a gallon,” says Hakes. “But it will certainly be over $3 in certain places like the West Coast.”
On the demand side, the EIA forecasts that gasoline consumption in 2021 will peak in August at 9.1 million barrels per day, which is up from 8.5 million barrels per day in August 2020 but down from the 9.8 million barrels per day in August 2019.
But an increase in summer demand on it’s own shouldn’t cause prices to spike sharply. “The summer crunch is a little bit exaggerated because the oil industry adjusts to the summer driving season,” says Hakes. “For instance, if they have to do maintenance on on a refinery, they'll try to do that in a month where they don't expect demand to be that high.”
Headlines predicting soaring gas prices may get attention, but consumers should turn to the EIA’s monthly reports for non-hyped forecasts, advises Hakes.
“In many countries, the government data is behind a paywall. And here, it's not,” he says. “That's the same information that's going to the President.”
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Relax, Road Trippers. Gas Prices Are Unlikely To Spike This Summer, Say Energy Experts - Forbes
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