Natural gas prices in the United States have more than doubled since the beginning of the year, and the summer air-conditioning season could push them up to another 25%.
According to JPMorgan, the start of the summer driving season on Memorial Day will see even higher demand and higher gas prices.
The AAA reports that the national average cost of a gallon of gas rose to $4.59 on Friday. That’s a quarter higher than the previous high of $4.33, set on March 11, and a 50-cent increase from just a month ago.
Matt Palmer, senior director of North American natural gas at S&P Global Commodity Insights said:
“In the last month, there has not been a meaningful uptick in U.S. lower 48 states production, you’re seeing exports running full out on LNG; power burn from the power sector is really strong and layer in the heat we’re seeing and the expectation that the southern tier of the continent in May and June will see well above normal temperatures. That’s a recipe for higher prices.”
Analysts predict even higher prices, as we head into summer. The nationwide average could surpass $6.20 a gallon by August. Currently, only California has crossed the $6 threshold, with the state average at $6.06, a report by JPMorgan says.
For Memorial Day weekend, an estimated 34.9 million Americans are scheduled to travel 50 miles or more by car, up 4.6 percent from the previous year. With this, drivers are being advised to fill up their tanks before the long weekend begins in order to avoid paying prices potentially as high as five dollars per gallon.
In a report by the Insider, Natasha Kaneva, JPMorgan’s head of commodities research, stated in a memo Tuesday that the price per gallon might rise another 37 percent by August to a national average of $6.20 per gallon.
Kaneva said, refineries normally raise production in the spring in anticipation of increasing demand in the summer. However, gasoline stockpiles have dropped to their lowest seasonal levels since 2019, owing to gas companies’ miscalculation of how quickly consumption would rebound from epidemic lows.
This week, gas prices in Massachusetts have remained at a record high of $4.73 per gallon, up 13 cents from the previous week.
On Monday, AAA Northeast’s Mary Maguire said:
“It’s a tough time for a lot of people, And the concern right now is the price of oil remains high, the conflict between Russia and Ukraine continues, and Memorial Day weekend with increased demand for gasoline as people hit the road is right around the corner.”
Adding that with the expectations of “strong driving demand” throughout the summer driving season from Memorial Day to Labor Day, Maguire said people should fill up their tanks early in the week.
“We’re looking at busy Memorial Day weekend travel forecasts, and I think it’s likely prices will increase as demand grows for Memorial Day travel, So I’d recommend that people fill up early in the week, Maguire added.”
Sources: Dailywire, Bostonherald, Financialpost