Analyst: ‘Near certainty’ gas prices will hit $5 a gallon

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A sign displays gas prices at a gas station on May 10, 2022 in Chicago, Illinois. (Photo by Scott Olson/Getty Images)

(NewsNation) — As gas prices continue to hit record highs on a nearly daily basis, politicians in Washington disagree about what to do to solve the problem.

On Thursday, the average price for regular gasoline hit an all-time high of $4.72 a gallon, according to AAA.

Industry experts believe it’s no longer a question of if the average price will hit $5 a gallon, but when.

“It’s a near certainty that the national average will eventually hit that $5/gallon mark,” said Patrick De Haan, the head petroleum analyst at GasBuddy.

That certainty has created a significant political problem for the Biden administration, which has struggled to get a hold of the problem amid post-pandemic supply chain issues and the ongoing war in Ukraine.

Democrats in Congress continue to put the blame on big oil companies whose profits surged during the first quarter of 2022.

Last month, House Democrats passed legislation in an effort to crack down on alleged price gouging by oil companies. If passed by the Senate, the bill would allow the president to authorize the Federal Trade Commission (FTC) to penalize those selling gas at “unconscionably excessive” prices.

House Republicans claim there’s no evidence of price gouging and point out that oil prices are determined by the global market, not oil companies.

De Haan agreed and said the bill would do nothing to curb prices at the pump.

“I think politicians would be better served by spending time actually fixing an issue rather than coming up with gaudy bills that aren’t going to go anywhere,” he said. “Every American should know that oil companies don’t set prices, they take whatever the price is determined by the buyer and seller in the market.”

Instead, De Haan said lawmakers should focus on reopening refineries and increasing domestic oil production, adding that the war in Ukraine and subsequent sanctions against Russia have created significant global supply challenges.

Republicans continue to push for increased oil production at home and blame Biden for disincentivizing companies to increase domestic drilling.

Although U.S. oil production remains below the all-time monthly highs seen near the end of 2019, it has ramped up gradually since February.

Toward the end of May, domestic oil production hit 11.9 million barrels a day — an increase from last September, when weekly production fell as low as 10 million barrels a day.

By 2023, annual domestic oil production is projected to hit 12.8 million barrels per day, which would break the yearly record of 12.3 million set in 2019, according to the U.S Energy Information Administration (EIA).

Despite the recent uptick, De Haan points out that many of the refineries that shut down during the pandemic haven’t come back. So even as daily production increases, overall capacity remains below what it used to be.

In 2021, U.S. refinery capacity fell 4.5% from the year prior, hitting the lowest level since 2015, according to EIA data.

On Thursday, the OPEC oil cartel and its allies agreed to increase output in July and August. OPEC+, which has resisted pleas from the White House to produce more oil, announced it will raise production by 648,000 barrels per day in the coming months.

The increased output could provide a much-needed boost to the global oil supply, but De Haan isn’t optimistic.

He points out that OPEC hasn’t delivered on its production promises for months and fears the recent announcement is yet another empty gesture.

“I think everyone is extremely skeptical that this is going to happen,” he said. “It sounds good. I want it to happen but I don’t know if it will.”

And that means, for the time being, gas prices will likely continue to rise.

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