California drivers are grappling with the most expensive gas in the nation, shelling out an average $6.06 per gallon as of Thursday. That could soon be the fate of drivers in the rest of the nation, according to a JPMorgan analyst, who predicts the national average per gallon price could reach $6.20 this summer.
That would represent a more than 30% increase from the current national average of $4.59 per gallon, already a record high, according to AAA.
Consumers are already spending thousands more annually on gasoline due to the months-long hike in prices at the pump, with the typical household spending $4,800 on gas at an annual rate — a 70% jump from a year ago, according to Wall Street economist Ed Yardeni. But more pain could be in store for drivers as the summer travel season kicks off, according to JPMorgan commodities analyst Natasha Kaneva, who described a "cruel summer" ahead.
"With expectations of strong driving demand — traditionally, the U.S. summer driving season starts on Memorial Day, which lands this year on May 30, and lasts until Labor Day in early September — U.S. retail price could surge another 37% by August to a $6.20/gallon national average," Kaneva wrote in her May 17 research note.
The reason, Kaneva wrote, is due to lower supply and higher demand.
Refineries usually produce more gas in anticipation of the summer travel season. But gas inventories in the U.S. are falling, and now sit at their lowest seasonal levels since 2019, she noted. "Gasoline balances on the East Coast have been even tighter, drawing to their lowest levels since 2011," Kaneva said.
The reason for the draw-down in gas inventories is an increase in exports, mostly to Mexico and Latin America, she said. If that continues, Kaneva added, "gasoline inventories could continue to draw to levels well below 2008 lows and retail gasoline prices could climb to $6/gallon or even higher."
The U.S. will produce about 9.1 million barrels of gasoline per day this summer, via refineries and imports, but demand will outstrip that at 9.7 million barrels per day by August, which means inventories will draw down even more. The result will be average gas prices of $6.20 per gallon, she noted.
To be sure, Kaneva's forecast is just one view of where the market is going, and it is dependent on the typical summer trend of Americans getting behind the wheel for vacations and road trips. But drivers could cut back on their trips due to the high cost of gasoline, for instance, putting the brakes on fuel demand.
Other analysts, such as GasBuddy's petroleum analyst Patrick De Haan, said they don't see gas prices hitting $6 nationally.
"This is *not* a guarantee," De Haan wrote on Twitter on Wednesday night, referring to Kaneva's forecast. "Personally, I just don't see the stars aligning to see the national average get to the $6/gallon level. However — there's little margin for error. $5 is a strong possibility. But $6? Not impossible. But improbable. For now."