Gas Prices: Projection for the Rest of 2022
With summer winding down, America is cruising toward fall with the cost of gas moving in the right direction. Record-high fuel prices stretched the budgets of summer travelers across the country — although some regions suffered a whole lot more than others.
That trend didn’t last long, though, as prices cooled as the days grew shorter. But will it last?
Here’s a look at the current situation at gas stations across America, a quick refresher on how it all played out, and a glance forward into what the fall and winter might bring according to the best information available.
Rising gas prices were already grabbing headlines as inflation rose in the early months of the year. But in the runup to Memorial Day Weekend, the news kept getting worse for a pandemic-weary country eager for a normal summer. Their travel plans would be hampered once again, this time not by a virus, but by gas prices that hit a record high in March.
By May 25, the national average price per gallon had risen to $4.60. That was already $0.43 cents higher than the record that had been broken two months earlier, and there was no relief in sight. On June 14, the national average price for a gallon of regular unleaded breached $5 for the first time in history — but thankfully the wave crested.
Prices began falling every day without interruption for the rest of the summer. By the start of August, the average price per gallon was barely over $4. Now, one month later at the start of September, it’s down to $3.75.
That’s still higher than $3.18, though, where prices were this time last year. So now the question is, will gas ever be that cheap again, and will the trend of falling prices continue for the rest of 2022?
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Falling oil prices have pushed down gas prices all summer long and continue to do so today. According to AAA, there are several reasons for the trend, including modest domestic demand for gasoline, improving global supply chains and a quiet Atlantic hurricane season.
More ominously, demand for oil has been stifled by reduced economic activity. For economists who worry about a looming recession, the trend toward ever-falling oil prices could be a harbinger of doom, but for motorists looking for a break at the pump, it’s welcome news.
Prices Are Expected To Continue Falling Throughout the Year
According to AAA, gas prices falling after Labor Day signals the end of the busy summer travel season. If that trend holds up in 2022, you can expect the price per gallon to continue its downward slope.
However, historical trends aren’t the only reason to believe that fuel costs will continue to recede throughout 2022. The U.S. Energy Information Administration (EIA) predicts that retail gasoline prices will average $3.60 in the fourth quarter of 2022 — a $0.15 decline from today — before rising ever so slightly to $3.61 per gallon in 2023.
The price volatility that defined the summer has been a regional affair all along. The South has enjoyed the lowest prices, even when prices were at their peak — and nothing has changed that dynamic since.
Texas, Arkansas, Louisiana, Mississippi and Georgia are all currently below $3.30 per gallon. South Carolina, Alabama, Tennessee, Kentucky, Missouri and Oklahoma are under $3.40. If prices drop back under $3, it will happen in the South first.
A petroleum analyst with GasBuddy told CNBC that he believes that Texas or Oklahoma will be the first states where the price per gallon will fall into the twos — and that it will happen before the arrival of 2023.
Prices Are Down Out West, but They’re Still High and Might Stay That Way
Prices have always been highest in the West, with the average topping $6 in California around the same time they breached $5 in the country as a whole. In some counties in the Golden State, the average was at one point over $7.
Today, prices have fallen below $5 in every Western state except for two — California and Hawaii. There are not many reliable predictions for the near future of gas prices in the West, but according to the New York Times, states like California levy the highest gas taxes in the nation, so even when oil is cheap, the price of gas there is not.
In short, prices in the Western states will probably fall with averages nationwide, but not anywhere near what’s expected in the South.
Gas in the Northeastern states had been nearly as expensive as it was in the West for most of the summer, but the recent relief has been most dramatic there. On Aug. 22, New Jersey, Maine, Vermont, Rhode Island, Massachusetts and Connecticut were all among the 10 states with the steepest drops in price. A week later on Sept. 1, the top 10 included Rhode Island, Connecticut, Maine, Vermont, Delaware, New Jersey, Massachusetts and New York.
One week after that on Sept. 8, the list of the states with the 10 biggest decreases included Connecticut, Delaware, New Hampshire, Vermont, Maine, Massachusetts, New Jersey and New York. It’s unclear if that trend will continue, but every single state in the Northeast has now fallen below $4.
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