Gas Prices Are Easing, but Don’t Expect Them To Plunge

Reduced refining capacity keeps them elevated, despite less demand

Woman at gas station
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Conditions that pushed gas prices past the $5-per-gallon milestone in recent weeks are finally easing, but analysts say prices aren’t likely to fall significantly over the course of the summer.

The national average for a gallon of regular gas could drop to the $4.75-$4.85 range by July 4, said Patrick De Haan, head of petroleum analysis at price tracking website GasBuddy. Other analysts are also predicting prices could dip in the coming weeks, most likely ranging between $4.55 and around $5 during the summer. The average price Monday was $4.98, according to data from AAA.

“I don't see much of a path for prices to significantly ease through the summer driving season,” said Reid I'Anson, senior commodity analyst at Kpler, a commodities analytics firm. 

Higher prices for crude oil due to worldwide demand, plus supply constraints following sanctions against Russia, a leading oil producer, pushed gas prices to a string of record highs this year. After peaking first in March before subsiding some, gas prices began shooting up again in May—after U.S. producers were unable to process enough crude into gasoline—and rose to a record $5.01 last week

However, the Energy Information Administration (EIA) said U.S. domestic oil production hit a post-pandemic high of 12 million barrels on June 10—a sign that supply pressures are easing, De Haan said. Other EIA data shows the number of barrels delivered to gas stations—an industry proxy for gas demand or consumption—dropped more than 1% earlier this month. Demand is down 8% from this point in 2019, indicating that summer gas sales are well below pre-pandemic levels. 

Gas prices remain relatively high despite slowing consumption in part because of diminished capacity to process oil into gasoline, a lingering consequence of historically low demand for gas that occurred during 2020’s pandemic lockdowns. Indeed, reduced refining capacity is likely to be a key factor keeping gas prices around or just below current levels this summer. That’s barring, of course, something like a fire at a processing plant, which could push prices up, or government moves toward a temporary suspension of the federal gas tax, which could bring them down.

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