Americans are facing what a major bank calls a “cruel summer” with gasoline prices that could hit $6 a gallon, according to a new report.
JPMorgan said that with fuel inventories at their lowest level since 2019, the summer driving season will burn a hole in Americans’ wallets.
“With expectations of strong driving demand … US retail price could surge another 37 percent by August,” JPMorgan wrote in its report, titled “Cruel Summer,” according to CNN.
“There is a real risk the price could reach $6+ a gallon by August,” Natasha Kaneva, head of global oil and commodities research at JPMorgan, told the outlet.
“Cruel summer: US gasoline prices to break above $6… Typically, refiners produce more gasoline ahead of the summer road-trip season, building up inventories. But this year, since mid-April, US gasoline inventories have fallen counter seasonally”
JPMorgan on ⛽️
— Jonathan Ferro (@FerroTV) May 17, 2022
Currently, $6 a gallon is the California average for a gallon of gas, according to AAA, which noted on Wednesday that yet another record high for a gallon of unleaded regular was set with the national average now hitting $4.567 a gallon.
As noted by the New York Post, the price of gas now tops $4 a gallon in every state, a dubious milestone never before achieved.
“Even the annual seasonal demand dip for gasoline during the lull between spring break and Memorial Day, which would normally help lower prices, is having no effect this year,” AAA spokesman Andrew Gross said.
Will the average price of gas hit $6 a gallon this summer?
Patrick De Haan, head of petroleum analysis at GasBuddy, said the $6 mark seems a stretch.
“I personally think we’d see a recession before we’d see a national average of $6,” he said, according to CNN.
But De Haan said that with supply this low and demand this high, “I don’t think much is impossible in this market.”
Americans are struggling with record gas prices – up over 50% since Biden took office – but he doesn’t care. Rather than expand domestic energy production, he continues to reduce U.S. production capacity (increasing our reliance on foreign oil) by canceling our oil & gas leases.
— Ron DeSantis (@GovRonDeSantis) May 12, 2022
One issue with supply is that refining capacity in the U.S. and Canada is down from pre-pandemic days because of the closures of some plants and the conversion of others to renewable fuel.
JPMorgan reported that East Coast gasoline inventories have not been this low since 2011 and that supply remains short as oil companies export gasoline that might otherwise go to the East Coast.
“If exports persist at this elevated pace and refinery runs — already near the top range for reasonable utilization rates — fall within our expectations, gasoline inventories could continue to draw to levels below 2008 lows and retail gasoline prices could climb to $6/gallon or even higher,” the bank’s analysts wrote.
JPMorgan said that unless refineries “immediately” reduce what they export and produce more gasoline, “US consumers should not expect much in the way of relief in prices at the pump until the end of the year.”
