High Gas Prices Expected to Continue Through Summer

Since the beginning of the Ukraine conflict, oil prices have skyrocketed and, with them, gas prices. As Michigan’s road travel season approaches, what can be expected at the pumps?

“It’s not impossible that by next week, we could hit that four dollar a gallon mark,” said Patrick De Haan, lead petroleum analyst at GasBuddy.com.Gas Prices Pkg 3 3 2200 00 33 06still001

It’s been a perfect storm. Gas prices skyrocketed at the pump thanks to a slow recovery from the pandemic, sanctions placed on Russia and oil companies shifting from cheaper winter gas, to more expensive summer varieties.

“It’s a lack of those discounts that had led to the lower prices,” said De Haan, “Suddenly we’re 40-50 cents a gallon higher than we were just a week or two ago>”

De Haan says there are unprecedented factors forcing prices to rise but the biggest help would come from the producers themselves.

“It’s on the oil sector. They’ve been taking their time increasing production,” said De Haan, “They’ve been spending their profits on share buybacks and dividends, they certainly could raise output in a meaningful way if they wanted to.”

The producers are making money with these high prices, what’s their motivation to increase production?

“Unlike Russia, unlike Saudi Arabia, unlike most of OPEC, our oil sector is not state owned,” said De Haan, “The president can’t just insist that they produce more.”

Hopefully, there is a limit to the climb.

“I think that we will probably plateau maybe April and May but prices will stay pretty high over the course of the summer,” said De Haan.

Prices plateauing at their highest, right when people are road tripping this summer.

“That’s certain, the gas price will impact travel in that regard,” said Howard Hughey of AAA Michigan.

De Haan says they can project all they want but the industry has just never seen anything like this.

“We’ve seen things like refinery issues and hurricanes but geopolitical tensions flaring up like this? Essentially losing the second largest oil producer globally?” said De Haan, “Yeah I guess that is surprising.”