And while gas prices have come down in recent weeks, there’s still a chance the bumpy road could get worse.
in most parts of the US at the beginning of the year, about $3 per gallon, but after a couple of months began to rise due to the recovery of seasonal demand and the war between Russia and Ukraine. Prices soon reached $4, and in many states prices even topped $5 a gallon as Americans take summer trips with enthusiasm.
At the beginning of this month, prices dropped back to $3, but that doesn’t mean our problems are over. It won’t take long to upset the delicate balance of supply and demand in today’s world and raise gas prices again. In the coming months, we can easily run into unforeseen situations that will cause a momentary and temporary surge on the pump.
creates the potential for sharp volatility in gas prices. Natural disasters cause destruction and can affect everything from the production to the transportation and distribution of gasoline throughout the country. Despite being quiet so far, the season is still predicted to be busy. For example, if a major storm hits the Gulf States, we may see gas station prices rise again temporarily until the threat of the hurricane season passes around Thanksgiving. This is because the bulk of the nation refineries
located on the coast of the Gulf of Mexico, along with thousands of offshore oil rigs
. The failure of a refinery of any size limits production capacity, reducing supplies and ultimately driving up prices. So if a major storm breaks out between the mouth of the Mississippi River and Houston, it could further limit supply.
The stakes are high given that every barrel of oil seems to have been sold amid strong demand and still limited supply. This is especially true with refineries
with a capacity of about one million barrels, or almost 5% of the national total, have been closed since 2019 due to Covid and natural disasters such as hurricanes and floods that have affected their ability to produce oil.
War in Ukraine
A clue that could keep markets on edge this winter is Russia’s war with Ukraine, Europe’s sanctions against Moscow, and the Kremlin’s even bigger game with its energy supplies. As one of the largest in the world oil producers
, Russia’s war with Ukraine has limited oil supplies due to US and EU sanctions on Russian energy in response to the war. Until there is certainty or clarity about the situation or solution, Americans should expect an unpredictable surge that could lead to more sudden spikes.
However, there is also good news. US oil production
is projected to continue to rise, and even with the Biden administration focusing on clean energy, US oil producers
recently produced more than 4 million barrels per week more than a year ago.
Manufacturers have many incentives to increase production to respond to high prices to meet strong demand. This focus on easing supply restrictions will also help lower gas station prices in the long run.
Looking ahead, the cycle of oil booms and busts will continue, and motorists will be dizzy from price movements. When it comes to gasoline prices, expect the national average to remain in the upper $3/gallon range, with California prices nearly $1 or so higher than next year. This year is no longer like any year we’ve ever seen, and 2023 may not be much different.