GasBuddy predicts a national average of $3.49 a gallon for 2023, down nearly 50 cents from 2022
Drivers across the U.S. faced high gas prices in 2022, with the national average cresting above $5 a gallon for the first time ever in June. So what’s on the horizon for 2023? WAMC's Jim Levulis spoke with Patrick DeHaan, the head of petroleum analysis for GasBuddy about the company’s 2023 fuel outlook.
DeHaan: I think there's certainly some good news. If you look at the start and the duration of the year, we're expecting that motorists won't spend quite as much at the pump in 2023. The average household likely to spend about $277 less on fuel. In 2022, the average household spent nearly $2,750, that likely will fall to about $2,400 in the year ahead. So while prices are likely to average a bit less, they're still likely to go up in the spring and be high for the summer. In fact, it's not impossible that the national average could yes, again, hit $4 a gallon. In fact, that would mean that for areas of New York, you may go into the low to mid $4 a gallon range. But that still will be a measure of relief from the $5 prices we faced in 2022.
Levulis: Your outlook mentions that the yearly national average price of gas for 2023 forecast to be $3.49. That's a nearly 50 cent per gallon drop from 2022. Now there's a rather strong likelihood of some sort of economic slowdown or a recession in 2023. What was the effect on gas prices during the last significant recession?
DeHaan: Well, during a significant recession gas prices tend to plunge simply because Americans are driving less, they're buying less. They may not have anywhere to work, so they drive less and commute less. So a lot of that depends on the severity of the recession. A more severe slowdown would mean even less oil and gasoline and things like diesel and jet fuel being consumed and tends to point to much lower prices. So we'll have to see the way the economy goes in the year ahead. But if we do see a severe downturn, there's certainly a strong possibility that gas prices will be lower than we anticipate.
Levulis: And a number of states and counties suspended their gas taxes in 2022 amid those high fuel prices. Those taxes set to be imposed once again in 2023. Will that have a major impact on prices at all?
Dehaan: Well it certainly will. At the stroke of midnight as we turn into the new year, it's likely going to mean that gas stations are raising their prices to reflect the fact that they're going to once again have to start collecting the state's gasoline tax. So look for gas prices to jump as states again, start passing along the gas tax.
Levulis: And the war in Ukraine, keeping in mind the big impacts of 2022 clearly impacted global gas prices and supplies. In your 2023 outlook, you note that the East Coast remains highly susceptible to that conflict. Why is that and how so?
DeHaan: A lot of the reason for that is because the Northeast has lost a major refinery. Back in 2019, the permanent shutdown of the Philadelphia Energy Solutions refinery was a major loss. Even prior to that much of the Northeast had relied on imports of gasoline and diesel to make ends meet. Now it has even more of a deficit when it comes to having enough refineries to make enough product. So now especially with Russia's war in Ukraine, more European countries are buying products from areas of the United States and a lot of that product would end up going to the Northeast, but now it's being essentially siphoned off by other regions, and that drives prices up. And so the Northeast remains susceptible, especially because it lacks refining capacity.
Levulis: And to that point, in the past, we've spoken a lot about America's overall refining capacity and typically how vulnerable it is to damaging weather or other events that can cause shutdowns as a key driver of price increases in the U.S. What's the outlook for refining capacity overall in the U.S. in 2023, and even the next few years being that it doesn't seem like new facilities are opening?
DeHaan: While there hasn't been a major new refinery built in the U.S. in 50 years. Having said that, there's just one major refining expansion that's taking place that's happening in Texas, will add the equivalent of a brand-new large-scale refinery, but much of that product will probably not end up flowing into the Northeast and really, with politicians going after oil companies, with the move to EVs investing in a multibillion-dollar refineries, probably not something very high on oil companies minds right now. So unfortunately, this is a problem that is the deficit in terms of refining capacity is a problem that probably will not be fixed anytime soon.