Report: Fuel Price Forecast Looking Mixed at Best

Matt Posky
by Matt Posky

While market analysts are projecting that fuel costs will be slightly lower in 2023 than they were last year, GasBuddy has released a report suggesting that the national average for a gallon of regular unleaded could still be as much as $4.00 by May.

In certain states (e.g. California), that’s likely to translate into $7.00 per gallon. Though GasBuddy felt reasonably confident that pricing would be more consistent than it was over the past 12 months, with annual projections leaving American drivers paying around $3.49 per gallon on average. Assuming everything goes according to plan, that is.

Still, it’s not exactly a return to the sub $3.00 averages enjoyed in the years leading up to the pandemic and would remain the highest average price the United States has seen (before Covid) since 2013. It should also be said that the energy price projections offered by government officials and market experts have frequently fallen short of reality these past few years, resulting in some trepidation among analysts.

"2023 is not going to be a cakewalk for motorists. It could be expensive," Patrick De Haan, head of petroleum analysis at GasBuddy, told CNN in an interview. "The national average could breach $4.00 a gallon as early as May – and that's something that could last through much of the summer driving season."

GasBuddy expects prices to climb as people begin driving more in the warmer months. Then, when refineries swap over to summer-grade gasoline, the U.S. will see another spike. This has the company assuming fuel prices will be as high as $4.25 per gallon in August before dipping closer to $3.00 by the end of 2023.

When fuel rates started pitching down late in the fall of 2022, your author remained perturbed. By lowering prices to a point where they were comparable to what was witnessed in late 2020, many people began cheerfully exclaiming that fuel costs were suddenly down. But some of us continued grinding our teeth and tried to remind people with the same capacity for memory as a goldfish that we hadn’t yet reached the national averages witnessed in 2019 – you know before the economy imploded after lockdowns and everyone collectively raised their prices.

The above is only being mentioned to offer some perspective. You may be fine paying higher energy costs overall if you find recent price reductions sufficiently soothing. It’s even somewhat understandable considering just how much more money everything has been costing of late. Frankly, any reprieve from a sustained beating is going to be welcome news to whoever is on the receiving end of those blows.

And that’s looking like what the end of 2022 was – temporary relief from exceptionally high energy prices.

GasBuddy is still projecting a higher per-gallon average for 2023 than we’ve seen since the last savage economic downturn wiped out a large portion of the middle class. It’s not alone, either. The Energy Information Administration (EIA) has likewise said that the national average is anticipated to average about $3.50 a gallon in 2023.

The rationale for these projections is down to refineries further increasing production in the coming months. But there is also a myriad of factors that are still driving up demand, with De Haan noting that a lot of the excuses we saw in 2022 will remain in play.

"Basically, curveballs coming from every direction," he said in reference to the wild swings that have taken place in the energy market. "Extreme amounts of volatility. I don't think we've ever seen such an amount of volatility as we saw [in 2022]."

CNN blamed the Russo-Ukrainian War as the primary culprit. While it certainly didn’t help matters, we know that fuel prices were actually surging upwards months before Russia made its move. The outlet also blamed Chinese lockdowns, which were mimicked by most Western nations (something CNN similarly failed to mention) and hampered global productivity for two years. Interest rate hikes from the Federal Reserve and the White House’s unprecedented use of the Strategic Petroleum Reserve were also cited as relevant factors. But greed has also become an issue, with energy companies seeing unprecedented profits of late.

In periods of economic turmoil, it’s fairly common to see industries trying to take advantage of inflationary spending. With the government devaluing its own currency, corporations have the perfect excuse to raise prices. However, the longer this goes on, the more money everyone is required to spend – leaving prices permanently elevated. While there’s no way to determine exactly where this tipping point occurs, we certainly seem to be somewhere in the middle of the process.

Regardless, the above factors are going to make any truly reliable forecasting for 2023 seriously difficult. We don’t really know what the Federal Reserve is going to try next, nor what tricks OPEC might have up its sleeve. China also appears to be incredibly hungry for fuel right now and remains in an incredibly volatile situation due to ongoing supply chain disruptions stemming from sustained lockdowns. Then there’s the war in Eastern Europe, which seems nowhere near ending and constantly runs the risk of roping in more nations.

None of those items are settled and GasBuddy likewise warned that natural disasters could result in regional prices surging for a time. The company warned that accurate forecasting would be very challenging and that 2023 still represented a “high level of uncertainty” in terms of predicting fuel pricing.

That means the U.S. could still average per gallon prices exceeding $5.00 by the summer.

"It's not impossible," De Haan said, "merely improbable at this moment."

[Image: Maridav/Shutterstock]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Jeff S Jeff S on Jan 03, 2023

    Matt Posky--Seems we have the same troll on this site that reverts to name calling of other posters on this site he disagrees with. There are other sites that have had similar problems that have had to close down their comment section. Don't want to see that happen on this site but this is likely to happen unless the comment section has more monitoring.

    • See 3 previous
    • EBFlex EBFlex on Jan 05, 2023

      Guess you don’t want to discuss that.

      So not only are you a hypocrite and a troll, you’re a coward too.

  • Tassos Tassos on Jan 04, 2023

    I drive too few miles with each of my two E 320 Diesels to worry about the price of fuel, whether it is $4.29 (I paid here when I filled it a week or so ago) or $7-10 when I fill the one I have overseas in the summer home.

    But one thing that surprised me was the huge differences in diesel prices from one station I normally use (Kroger, because I have $0.5-$.8 discounts once a month with my fuel points), which had $5.49, or a BP station a mile down the road or two, which is where I tanked.

    More importantly, it is DIESEL, NOT GAS< prices that fuel the 40 year high inflation in your supermarket. Because none of the things you buy are transported with gas, practically ALL of them are transported by trucks or trains using EXCLUSIVELY DIESEL FUEL.

    SO if the geniuses in the WHite House really care to bring inflation down, they should TRY to relieve TRUCKERS of the very high diesel prices. Because 50 or 100 Tesla semis will not even make a scratch, let alone a dent, on these prices.

    • See 1 previous
    • Jeff S Jeff S on Jan 04, 2023

      Oil is a commodity and the price is determined on the commodity market. Oil is traded as a future. The price of oil products such as gasoline, diesel, and motor oil is not regulated it is determined by supply and demand. A President cannot decree the price of oil and its products. Congress has in the past passed legislation for Windfall Profits Taxes and set a ceiling for the price of crude oil back in the 70s after the 1973 Arab Oil Embargo but that legislation was rescinded by President Reagan and the Congress. Oil companies are accountable to their stockholders and as most capitalistic businesses their goal is to maximize profits they are not in the business to provide cheap oil. The oil industry has among the strongest lobbyist and a majority of the politicians of both parties are not going to go against the industry because the industry supports most of their campaigns. What a politician says is much different than what they do. I heard a Republican Congressman promise that he would lower the price of food including eggs. That is not going to happen as well. You can blame the President for the price of oil but that will not change anything or you can take responsibility for your own life and decide what type of vehicle you will drive and how much driving you will do. You have a right to drive whatever vehicle you want but if you drive a less efficient vehicle and drive a lot that is your choice and you are responsible not any politician and not the taxpayer it is your choice and you alone are responsible. A grownup takes responsibility for their own decisions and doesn't blame others a child can blame others because their parents are responsible for them and for teaching them the difference between right and wrong and how to get thru life.

  • Clark The Ring (Nürburgring) is the only race track I've driven on. That was 1985 or 1986 with my '73 Fiat Spider (and my not-so-happy girlfriend). So I made the Karussell (today: Caracciola Karussell, which I believe the author meant; there is another one: Kleines Karussell).
  • AZFelix This article takes me back to racing electric slot cars with friends on tracks laid out in the basement. Periodically your car would stop due to lost connections or from flying off the track and you would have to dash over to it and set it right. In the mean time your competitor would race ahead until faced with a similar problem. It seemed like you were struggling harder to keep from losing than trying to win. Fun times.“History never repeats itself, but it does often rhyme.” Mark Twain
  • MaintenanceCosts What Americans get told (a) vs. actual EV ownership experience (b)(and, yes, I am an actual EV owner)a. You'll be waiting indefinitely for slow chargersb. Nearly all of your charging happens while you're at your housea. EVs are prohibitively expensive toys for the richb. Fuel cost is 1/4 that of gas and maintenance about the same, with purchase price differences falling quicklya. EVs catch fire all the timeb. Rates of ICE vehicles catching fire are much higher, although the few EV fires can be harder to extinguisha. You can't take a road tripb. Road trips are a bit slower, but entirely possible as an occasional thinga. iTz A gOlF cArT!!1b. Like a normal car, but with nicer power delivery and less noise
  • Pete Skimmel We bought a last year 2015 model XB as a leftover new car at our local Toyota dealer in early 2016. Stupidly cheap at about $18,500 out the door (no sales tax in Oregon), it has an automatic and the usual amenities. It's been a great around town car that my wife hopes to keep until they pry her cold senile hands from the steering wheel in about 20 years. When we occasionally carry adult passengers in the back seat they are always in awe at the space in this smaller vehicle. Now approaching 49k miles on the clock, our out of pocket costs have been wiper blades, a set of decent tires and routine oil changes that I do in the garage. It consumes zero oil between changes. Yes, it's an appliance, but a very serviceable one.
  • Slavuta "The 4,861-pound curb weight" -- poor tires"on track, this application sounded pretty good" -- can they make it sound like Hemi?