Improved news: Gas prices may have peaked during the spring season.
All these alarming developments had people worried about gas prices skyrocketing to $4, causing damage to the US economy and increasing inflation.
But thankfully, that hasn't happened—yet. In fact, US gas prices have started to decrease and even plummeted in recent days. The national average was $3.66 a gallon on Monday, down from $3.68 a week before, according to AAA.
Now, there's a growing hope that we've reached or come close to the peak for gas prices this spring—or maybe even for the entire year.
Patrick De Haan, Chief Petroleum Analyst at GasBuddy, believes drivers will soon see relief while filling up at the pump. He told CNN, "I'm hoping the worst is behind us. Unless something major happens, there's an increasing likelihood the national average has hit the projected spring peak."
Tom Kloza, Global Head of Energy Analysis at the Oil Price Information Service, also shares this optimistic outlook. "Most of the concerns for the first half of the year have passed. I think we're in the clear until hurricane season," he said.
Of course, it's important to note that gas prices still aren't exactly cheap. They were cheaper back in April 2021, as well as in the spring of 2020 due to Covid-19 keeping many people off the roads.
Even with the recent dip in prices, a springtime peak below $3.70 a gallon would be good news for consumers who had genuinely feared even higher prices at the pump. "[It] could have been much worse," said Andy Lipow, President of consulting firm Lipow Oil Associates.
Now, just seven US states have drivers paying $4 or more for a gallon of gas, all located in the Western half of the country. The state with the highest average price is California, where it's $5.40, up from $4.88 a year ago. The national average is still nowhere near the record-breaking jump above $5 a gallon last June.
"It's clear to me this will not be a record-setting year. It will feel much more normal to fill your tank this year," De Haan stated.
However, officials in Washington may be breathing a sigh of relief. Rising gas prices earlier this year contributed to worrisome inflation increases, making it unclear when the Federal Reserve will be able to reduce interest rates. A spike in gas prices would be an additional challenge for President Joe Biden as he tries to convince voters of his economic policies before November. His approval rating for the economy is at 34%, while his approval rating for inflation is at a scary low 29%, according to a new CNN poll.
And Biden's administration recently backed off proposals to buy crude oil for the US Strategic Petroleum Reserve after the risk of a wider conflict in the Middle East was reduced.
However, some analysts predict that gas prices will still increase a bit further. Lipow thinks the national average will peak at $3.75 a gallon this year.
Although the reasons for the lack of rising gas prices are complex, some factors include the stabilization of oil prices, the end of the switch to summer-grade gasoline, and the increased supply of US oil. We're also seeing the benefits of record-setting US crude production, which is helping to offset production cuts from OPEC+.
The seasonal factors have also played a role in the decline of gas prices. The transition to summer-grade gasoline has been completed at US refineries, and gasoline supply has been bolstered by the return of refineries after routine maintenance.
But there are a few possible hurdles ahead. The potential for a double peak in gas prices exists, as we saw last year when they reached a high in April, calmed down, and then rebounded later in the summer after extreme heat caused disruptions in US refineries.
The biggest risk could be a severe hurricane that impacts oil refineries in the US Gulf Coast. Colorado State University meteorologists are warning that this could be the busiest hurricane season ever, with more storms and hurricanes than ever before. "Hurricane season is the next major test," Kloza said.
Summary:
The potential for gas prices soaring to $4 and thus negatively impacting the US economy and inflation was a real concern in recent weeks. Fortunately, gas prices have stopped rising and even started to drop. The national average currently stands at $3.66 a gallon and is predicted to soon provide some relief to drivers. Analysts believe the worst is behind us, but there are still risks of gas prices rising again due to seasonal factors and potential disruptions from hurricanes.
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Source: edition.cnn.com
