GasBuddy Projection: $4 gas could return as soon as May

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Gas prices will probably be significantly cheaper overall next year. Yet the national average could still climb back above the $4-a-gallon threshold as soon as May, according to GasBuddy projections shared exclusively with CNN.

The good news is that GasBuddy, an app that tracks fuel prices, doesn’t expect a repeat of this year’s wild swings that at one point sent gas prices above $5 a gallon for the first time ever. That spike set off recession alarm bells, worsened inflation and crushed consumer confidence.

The national average for regular gas, a metric closely watched by Wall Street, Main Street and even the White House, is expected to drop to $3.49 a gallon in 2023, down roughly 50 cents from the average this year, according to GasBuddy.

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The bad news is GasBuddy expects the national average to climb from $3.10 a gallon today to a range of $3.52 to $4.05 in May as Americans hit the roads.

“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. “The national average could breach $4 a gallon as early as May – and that’s something that could last through much of the summer driving season.”

Gas prices typically rise heading into the summer as Americans hit the road more during the warmer weather. In addition to the pick-up in demand, refiners switch over to summer-grade gasoline, which is designed to improve air quality and costs more to produce.

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Prices for the next 12 months will be driven by developments in the war, the Federal Reserve’s fight against inflation, OPEC policy, China’s Covid restrictions, a potential economic recession and perhaps other forces that are not even known at this point.

In its report, GasBuddy notes there is a “high level of uncertainty” in 2023, “making an accurate forecast very challenging.”

For instance, De Haan said a US recession would hurt demand for energy and likely drive prices lower than the $3.49 average forecast by GasBuddy.

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After hitting $5 a gallon in June, gas prices have been on a remarkable decline, especially lately. The national average is now about 20 cents below the same period of a year ago, according to AAA.

The plunge to 18-month lows has been driven by a range of factors, including the return of refineries sidelined earlier this year, recession fears, record-setting releases of emergency oil by the Biden administration and the fact that Russia’s supply of oil has not been severely damaged by the war in Ukraine and Western sanctions.

Gas prices are not expected to return to $5 this summer – although GasBuddy isn’t ruling that out.

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