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Drivers could see gas prices surge to nearly $7 a gallon in some US states as refinery issues bite supply and Chinese demand bounces back, GasBuddy says

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Gas pumpGas prices could top $4 a gallon in most major US states next year, GasBuddy says.

(Photo by Steve Pfost/Newsday RM via Getty Images)

  • Gas prices could surge toward $7 a gallon in some US states in 2023, according to GasBuddy. 
  • Cold snaps across the US and revived energy demand from China are the two key factors that could push up prices. 
  • “2023 is not going to be a cakewalk for motorists. It could be expensive,” said Patrick De Haan in a blogpost. 

Brace for a spike in US gas prices next year due to refinery disruptions and amid renewed energy demand from China as the Asian nation reopens its economy, according to GasBuddy. 

“2023 is not going to be a cakewalk for motorists. It could be expensive,” said Patrick De Haan, head of petroleum analysis at the firm, which tracks fuel costs, in its 2023 fuel outlook.

The national average price of gas at the pump could top around $4 a gallon in most major US cities as early as May next year, De Haan said, from $3.18 on Friday. Cities in the West Coast state of California, such as San Francisco and Los Angeles, could see gas prices approach nearly $7 a gallon in the summer of 2023, according to GasBuddy.

“Basically, curveballs are coming from every direction,” De Haan said. “I don’t think we’ve ever seen such an amount of volatility as we saw this year, and that will be a trend that likely continues to lead to wider uncertainty over fuel prices going into 2023,” he added.

US gas costs have retreated from the highs reached in June, when the national average topped $5 a gallon as global oil prices surged amid disruptions created by Russia’s war with Ukraine and an energy crisis in Europe. The drop came after President Joe Biden started releasing record amounts of crude from US reserves to rein in energy costs and inflation. 

According to De Haan, a rebound in gas prices is already starting in part due to the extreme cold weather conditions blanketing the US, which has caused havoc on refineries and curbed the production of gasoline and diesel. 

That means 2022 will close with a yearly national average for gasoline of $3.95 a gallon, the highest yearly average recorded, De Haan tweeted

“China’s reopening is a wildcard to watch in coming days/weeks,” De Haan warned in a tweet. “The window may be closing on those ultra-low prices that we’ve seen over the last couple of weeks. As China has reopened, oil prices have rebounded,” he said in a Friday interview on CNBC

On the whole, however, GasBuddy noted that drivers are estimated to spend 10% less on gasoline next year compared with 2022, given that the average household is likely to spend $277 less on fuel.

“What we saw in 2022 was simply madness at the nation’s fuel pumps, with records being set seemingly left and right as Covid imbalances persisted and Russia invaded Ukraine,” De Haan said in GasBuddy’s 2023 outlook report. “While it’s highly improbable that lightning strikes the same spot twice, the storm clouds over oil and refined markets may persist, and there still could be some spikes as the market remains somewhat tight.”

Read the original article on Business Insider
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