In the coming months, you may be able to increase the value of your car simply by filling the gas tank. The average national per gallon price of gas is now at a record $4.589, but experts predict it will go higher – may be significantly higher.
Georgians have enjoyed some of the lowest per-gallon prices in the country, thanks to a suspension of the state’s gas tax. But that suspension is supposed to end on May 31 and if it’s not extended, on June 1 gas will increase by 29.1 cents per gallon, the amount of the gas tax.
As if that isn’t enough, some experts have predicted shortages of diesel fuel and possibly even regular gas. A diesel shortage would have a serious impact on the supply chain.
Analysts from J.P. Morgan’s global commodities strategy team last week predicted a 37 percent increase in gas costs by the end of summer, which would put the national average at more than $6.25 per gallon. California, which already has an average of more than $6, would exceed $8 per gallon.
Energy analyst, Stephen Schork of The Schork Group is a bit more conservative, predicting prices to rise above $5 by summer’s end but concedes that $6-plus is possible by the end of the year.
The primary culprit in the rising prices is demand not keeping up with supply. Schork said the East Coast’s refinery capacity has been reduced by about 40 percent in the past three years because infrastructure couldn’t keep up with the demand. The covid pandemic, which reduced driving, initially masked that reduction but it is evident now as demand increases.
Also factoring into the demand is an 80 percent reduction in the available U.S. Federal land for drilling for oil. Some oil companies have also chosen to start paying down debt and increasing stockholder dividends rather than investing in new wells.
In addition, national oil reserves are at a lower point than usual for this time of year.
One news outlet reported that a gas station in Washington State was retooling its pumps to accommodate double-digit dollars, although no one has yet predicted that even in the expensive West Coast areas that it would reach those numbers.
