Gasoline prices in 2023 likely won’t repeat 2022’s wild swings that culminated in average pump prices topping $5 a gallon for the first time ever, but prices will creep back above $4 as the typical driving season kicks off in May.
That’s the prediction of retail gas app GasBuddy. Analysts for the national price-tracking service on Tuesday issued a recap of 2022’s volatility, stirred by the economic recovery from COVID 19’s worst days and the global market disruptions from Russia’s attack on Ukraine. The app released its 2023 outlook exclusively with CNN, ahead of an expected update on its own site.
The national average for regular gas — a metric closely watched by stock
investors, American households and Washington’s lawmakers and election strategists — is expected to be $3.49 a gallon for 2023. That’s down roughly 50 cents from the average this year, according to GasBuddy.
The U.S. and European Union governments, in particular, have tried to align policy efforts to lessen the severity of energy shortages, while still punishing Russia for its unprovoked attack on its neighbor. Lingering security issues and a prolonged war could undermine the gasoline-price outlook, analysts have said. And over the longer term, a push toward electric vehicles
will add to gas-price volatility each year.
“ The national average for regular gas is expected to be $3.49 a gallon for 2023. That’s down roughly 50 cents from the average this year, according to GasBuddy. ”
For certain, 2022 brought a wide band for prices: from a $3-per-gallon national average in early January to a record high of over $5 per gallon in June and back to just below $3 for the Christmas holiday. Plus, that’s just the average and excludes additional market whims and regulations impacting select cities as well as the variance in local taxes. In some U.S. locations, consumers were paying well above $6 a gallon at the peak.
Gasoline, especially as more workers returned to their jobs on site, has been a major force behind the shocking decades-high jump in inflation this year. And it came on top of surging food prices. At the grocery store, year-over-year price growth hit a 43-year high in August. The latest government readings show some moderation in inflation as the Federal Reserve has aimed for a soft landing for the economy with higher interest rates.
Read: Hit by high inflation, more people turn to GoFundMe to pay for gasoline, groceries and baby formula
With 2023’s expected pump savings, household budgets could find $277 freed up on average for the year, according to GasBuddy. And for the broader economy, the ease in prices could cut overall gasoline
spending by about $55 billion in 2023.
In December, with holiday spending underway, Americans saved about $20 per fill-up, compared with six months earlier, Patrick de Haan, head of petroleum analysis at GasBuddy, said in the app’s monthly outlook, issued earlier. Pump prices were just north of $3 for much of the nation this month, easing below $3 in some locations in time for the late-month holidays. By comparison, gas prices hit a record high of $5.034 on June 16.
Related: Gasoline prices are down 5 weeks in a row, but an end to the declines may be on tap: GasBuddy
And: Gas prices are now lower than at this time last year. Could they fall below $3 a gallon in the months ahead?
“ With 2023’s expected pump savings, household budgets could find $277 freed up on average for the year, according to GasBuddy. ”
The summer driving season, which kicks off around Memorial Day in May, could mean average prices topping $4 per gallon, de Haan and team told the news outlet.
Each year, gas prices typically rise heading into the summer as largely car-reliant Americans hit the road more during the warmer weather. In addition to the seasonal demand factors, refiners switch over to summer-grade gasoline, which is designed to cut emissions to improve air quality and costs more to produce, an increase passed through to drivers.
The GasBuddy forecast calls for the daily national average to top out at as high as $4.25 a gallon in August before dropping toward $3 a gallon by the end of 2023.
Government data is largely aligned with GasBuddy’s projections.
In an earlier report, the Energy Information Administration said the national average is expected at about $3.50 a gallon in 2023 as refineries continue to ramp up production of gasoline after the COVID shutdown. The EIA also lifted its 2023 price forecasts for WTI
and Brent crude
to $89.33 a barrel and $95.33, respectively.