In recent months, New Jersey gas prices have been up to 10 cents a gallon higher than the national average, prompting an analyst who forecast the United States could pay $ 4 a gallon by Memorial Day, to speed up its forecast for the Garden State.
Patrick De Haan, head of petroleum research at GasBuddy, said New Jersey is at “increased risk” of hitting this holiday benchmark a little earlier.
There’s a lot more to consider than supply and demand, De Haan said, starting with refineries switching back to more expensive summer formula gas in the spring.
“On average, gas prices have risen between the start of the year and Memorial Day weekend between 25 and 75 cents per gallon over the past decade,” he said.
When the COVID-19 pandemic began nearly two years ago, Americans stayed home in droves, sending demand first, then oil prices, and finally oil production, which collapsed.
De Haan said since then, uncertainty has tarnished the picture of where gas prices could go next.
“The whole pandemic has really turned the factors that go into what you pay at the pump on their heads,” said De Haan. “COVID-19 created a huge imbalance between supply and demand, so we are mainly paying a higher price.”
But, he said, there is a silver lining. When prices go up, so does production, which eventually makes prices go down again.
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There might be a time gap in this relationship that appears to be slowing its development, but De Haan thinks that New Jersey gas prices could return to where they were before by the end of 2022.
“I think we’ll see relief at some point,” he said. “Oil is a very boom-bust cycle; when prices are low, oil companies have less incentive to produce oil and various products.”
Until that relief comes, however, De Haan suggests shopping whenever possible.
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