Financial analysts believe that the national gas average may follow in California’s footsteps and hit $6 or more per gallon by the end of the summer.
JPMorgan told CNN that if gas exports continue to trend upwards and domestic oil refinery gasoline inventory continues to fall below demand, the U.S. gas inventory could hit 2008 lows “and retail gasoline prices could climb to $6/gallon or even higher,” the JPMorgan analysts said.
The national average for a gallon of gas is $4.59, almost 50 cents more than a month ago, and $1.55 more than a year ago, according to AAA.
AAA said gas prices originally skyrocketed during the spring due to economic repercussions from Russia’s invasion of Ukraine. Now with more people driving during the summer months, oil companies are switching to a more expensive “summer blend” of gasoline that typically adds 7 cents to 10 cents per gallon depending on the market. The transition to summer oil has worsened the already inflated gas prices.
JPMorgan emphasized that oil refineries are having trouble meeting the current demand, with higher traffic during the summer months, $6 gas prices may be a reality by the end of August.
East Coast gasoline inventories are at their lowest level since 2011, analysts told CBS News reporters.
Analysts told the station that one of the main reasons why gas inventories continue to dip is due to an increase in exports to Mexico and Latin America.
Gas prices most likely won’t hit $6 per gallon if demand during the summer months falls below expectations. The U.S. Energy Information Administration expects gas prices to fall during the third and final quarter of this year.
Sanctions placed against Russia are another significant contributor to the global rise in oil prices.
Russia is one of the world’s largest oil exporters, according to BP Statistical Review of World Energy the country produced 10.1 million barrels per day (BPD) of crude oil and natural gas condensate.
The cost of crude oil is currently around $110 a barrel, according to AAA.
The conflict devastatingly impacts the U.S. fuel economy. U.S. consumers use 20.5 million barrels of oil a day, more than any other country, the Energy Information Administration reported.
Ukraine is also a major transatlantic crude oil import location. The European conflict is disrupting import operations.
Based on predictions, JPMorgan analysts believe total US gasoline inventories could fall below 160 million barrels by the end of August, the lowest level since 1950, CNN reported.
Unless oil refineries “immediately” cut exports and shift production towards gasoline, “US consumers should not expect much in the way of relief in prices at the pump until the end of the year,” JPMorgan said.
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