Gas prices are expected to fall in 2023 after a year of high inflation and market volatility. However, a new forecast says that summer travel could still push prices up to $4 per gallon as early as May.
On Wednesday, the app GasBuddy, which provides real-time gas price information, released projections for 2023. These projections indicate that Americans can anticipate some relief at the pump at the beginning of the following year. According to the report, the annual national average price is expected to fall by nearly 50 cents to $3.49 cents from 2022.
Due to the lingering effects of COVID-19 policies that shut down crude oil refineries, limiting oil production, and disruptions in international trade related to the Russian invasion of Ukraine, fuel prices reached record highs in 2022. According to GasBuddy, the decline in the supply of gasoline, diesel, and jet fuel in the United States will be alleviated by an increase in global refining capacity as the world moves on from the pandemic.
During the low season in January and February, when demand is at its lowest, gas prices are anticipated to remain around $3 per gallon. However, as drivers take to the roads and take advantage of the pleasant weather in the spring and summer, prices may rise as much as $4. Before the year’s over, costs ought to diminish again as that request dies down.
“2023 is not going to be a cakewalk for motorists. It could be expensive. The national average could breach $4 a gallon as early as May – and that’s something that could last through much of the summer driving season,” said Patrick De Haan, the head of petroleum analysis for GasBuddy.
“Basically, curveballs are coming from every direction. Extreme amounts of volatility remain possible, but should become slightly more muted in the year ahead,” he added. “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.”
Prices in the majority of major cities in the United States are expected to reach a maximum of approximately $4 per gallon, according to the forecast. However, if refineries struggle to produce fuel under the state’s burdensome regulatory regime, California cities like San Francisco and Los Angeles may see their record-high prices of $7 per gallon in the summer of 2023.
It is anticipated that Americans will spend $470.8 billion on gasoline in total next year, a $55 billion decrease from 2022. According to estimates from GasBuddy, the typical household will spend approximately $2,471 on gas in 2023, a savings of $277 over this year.
GasBuddy’s projections reflect those from the Energy Data Organization, which anticipates that retail gas costs should be a normal of $3.51 per gallon in 2023. After revising their outlook in response to the Russian invasion of Ukraine, the company has an excellent track record for predicting fuel prices, with just a 0.8 percent margin of error in 2022.
GasBuddy anticipates that markets will settle down in the coming year. However, the outlook for 2023 acknowledges that the economic recession, unpredictability and unscheduled challenges facing U.S. refineries, and extreme weather-related natural disasters may all have an impact on retail fuel prices.
“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. “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.”