Gas Price Prediction 2022: Despite Relief from OPEC+ Gas Prices continue to Rise! May Rise Further
Gas prices have been increasing over the last few months on the back of constrained crude oil supplies (on account of COVID) as well as the Russian Invasion of Ukraine as well as demand surging to Pre-COVID levels. We explore available data and predictions to arrive at a fair estimate of the likely increase in Gas prices over the next few weeks and months.
In a major relief to curb prices, OPEC+ has agreed to produce 648,000 barrels everyday for the months of July and August, and will decide on increased productions’ continuation by the end of August. Which is approximately 7% of the demand worldwide. Which may result in oil prices going down to possibly below $100 per barrel till the end of 2022.
High gas prices creating ‘real tradeoffs’ for hourly workers: Analyst
Why are Gas Prices high?
- US Oil Production had fallen in 2020 and is yet to recover. In 2019, the US produced 4485 million barrels of oil. This fell during the covid period to nearly 4000 million barrels in 2021. Saudi Oil production too fell by nearly 7%
- The Federal Reserve’s balance sheet expanded at a rate of $320 B per month in 2020 and about $100 B in 2021. While this staved a crash in the economy, it has also created a demand which cannot be met by Oil-producing nations and hence the increase in price
- Lastly, the war in Ukraine has resulted in sanctions against Russia and is also likely to see Russia reducing its output in the next few months.
Gas Price Prediction 2022: Crude Oil Forecasts for the next 12 Months
According to the US Energy Information Agency EIA
- The rise in prices of Crude Oil is due to a lack of sufficient supply of Crude Oil from the OPEC, US Production slowdown due to COVID in 2020 and a range of International problems including the Russian Invasion of Ukraine
- Brent Crude averaged $113 per barrel in May. It is predicted to average at $108 per barrel in the second half. While Middle East Oil Production is up, Russian production is likely to fall in the second half of the year.
- In Q3 of 2022: The retail prices of gasoline are expected to go down to $4.28 per gallon. The retail prices of diesel is expected to go down to $4.78 per gallon.
- Crude Oil Prices are likely to remain above $100 (Brent Crude closed at $119 on Friday) for the rest of the year
- Crude Oil Inventories are likely to increase from the last quarter of 2022
Gas Prices Prediction 2022: How have Gas Prices Changed over the Year?
According to data compiled by the AAA
- Gas prices have increased over the last 7 days
- Gas prices have decreased over the 1 Month
- Gas prices have increased over the last 12 months
GAS Price Latest:
Which States Have the Lowest Gas Prices? (< $4.5)
- South Carolina
- North Carolina
Which States have the Highest Gas Prices? (> $5.5)
- California (Highest)
Gas Price Prediction Summer 2022: Expert Forecasts
Forecasts are never precise in this sector particularly because it is unclear what consumers would do once Gas prices cross a threshold. That said, it is clear there is a likelihood that prices will increase by 5-10% over the next few weeks and probably much higher during the summer. Prices are likely to ease by the end of the year.
|Kiplinger||May 23rd||5-10% higher from current levels in the next few weeks|
|JP Morgan||May 24th||25% higher by August 2022|
|Pickering Energy Partners||June 3rd||Max of 26% higher by August 2022|
|Goldman Sachs||June 7th||Prices to average $135 in 2022 second half.|
|The Wall Street Bank||June 7th||Crude Oil to average around $140 in 2022 second half.|