Analysts at JPMorgan are warning that price may become the norm across the country by the end of summer, as the national average for gasoline reaches $6 per gallon in California today.
According to the American Automobile Association, the national average price of gasoline is now $4.57 per gallon, which is a new high. That number has risen 16 cents from the previous week’s average, 48 cents over last month’s average, and almost $1.50 more expensive than the country’s average last year, which was $3.04. Every state now has an above-average gas price of over $4 per gallon: with Kansas, Georgia, and Oklahoma catching up to the rest of the nation as of this week.
Gasoline prices are expected to keep climbing as the ongoing conflict between Russia and Ukraine disrupts global supply chains, while the Biden administration has called off oil and gas lease sales at home. With more Americans anticipated to travel for work or pleasure this summer, demand for gasoline is expected to rise, pushing prices even higher.
By August, the price of gasoline in America may reach $6 per gallon, according to a note from JPMorgan’s Natasha Kaneva. As East Coast gasoline reserves reached their lowest level since 2011, JPMorgan predicts prices will rise another 37% by August.
During the epidemic, oil refineries in the United States and Canada took a hit, with some permanently closing and others being converted to refine renewable fuels rather than crude oil. The conflict in Ukraine is exacerbating the issue by restricting access to gas for European nations that have relied on Russia for oil, which has prompted an increase in demand for U.S. and Canadian exports.
According to research from JPMorgan, the shift toward exports has diverted US and Canadian refineries away from supplying gas stations in the Eastern United States.
Analysts at JPMorgan believe that if exports continue to rise at their present rate and refinery operations, which are already near the upper end of normal usage rates, fall in line with expectations, gasoline inventories could reach lower levels than in 2008.
If these expectations are correct, total gasoline stockpiles in the United States may be reduced to 160 million barrels by the end of August, which would be the lowest level since the 1950s and represent a national average price of $6.20 per gallon of gas.
To avoid that calamity, US refineries must “promptly” cut exports and boost gasoline production. If they don’t, “US motorists should not anticipate much difference in prices at the pump until the end of the year,” according to JPMorgan.