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Gas price predictions: how high will the cost per gallon rise and when will it go down?

Gasoline prices are causing headaches for motorists but with no end in sight to the Russian sanctions, experts warn that prices are likely to rise further.

What's next for gas prices in the US?
Anadolu AgencyGetty

The average price of a gallon of gasoline has risen almost constantly throughout 2022, reaching record heights every day with little suggesting an end to the increases is near.

On Wednesday, 8 June AAA confirmed that the average price of a gallon of gasoline across the United States was $4.955, closing in on the $5-per-gallon figure that would have been unthinkable last year.

At the same point in 2021 the average price was $3.060. Consumers are now being forced to pay nearly $2 more per gallon that they were 12 months ago, and that is having a severe effect on the household finances of millions of Americans.

Will the price of gasoline continue to rise?

In thirteen states - Alaska, Arizona, California, Hawaii, Illinois, Indiana, Maine, Massachusetts, Michigan, Nevada, New Jersey, Oregon and Washington – the average price of a gallon of gasoline has already exceeded $5, and experts are warning that the rest of the country is likely to follow suit.

One report from JP Morgan predicted that the average price of gasoline could reach $6.20 per gallon by August this year, assuming that there is no swift resolution to the factors currently fuelling the price rises.

Wall Street institution Goldman Sachs have similarly bleak predictions for the price of crude oil, the key component involved in the production of motor fuel and other products. The price per barrel is currently around $120 a barrel, but the investment bank believes that figure will hit $140 per barrel over the summer months.

A large spike in prices remains quite possible this summer,” Goldman Sachs strategists wrote in their report. “We believe oil prices need to rally further to normalize the unsustainably low levels of global oil inventories, as well as OPEC and refining spare capacities.”

Demand continues to outstrip supply

One of the key factors pushing the price of gasoline skywards is the scarcity of crude oil, due in large part to the sanctions on Russian oil imposed by the White House. The United States, like many other western powers, have introduced trade restrictions on Russia-produced goods in response to the invasion of Ukraine.

The consequence of this effort has been the strangulation of the global supply, pushing up the price of crude oil further. With no end to the war in Ukraine on the horizon, it is fair to assume that the sanction will remain in place for some time.

With motor transport typically higher over the summer holiday months the demand for fuel will only increase in the coming weeks, so motorists may have to wait until the autumn for prices to begin to fall.