Will NJ see $5 gas again? This analyst sees a winter reprieve followed by a new surge
After a dip from last summer's record highs, gas prices in New Jersey are likely to head back above $4 this year — and could approach $5 a gallon again in the New York metropolitan area, according to one analysis.
Price-tracking app GasBuddy, in its 2023 fuel outlook, predicted that costs will rise through the summer as China's economy reopens from COVID lockdowns and Russia's war in Ukraine continues to pressure global supplies.
Garden State drivers won't see the $7-a-gallon prices that GasBuddy expects on the West Coast. But nationally, regular unleaded gasoline is likely to surge above $4 by May, said GasBuddy's head of petroleum analysis, Patrick De Haan. The New York City market, which North Jersey closely follows, may peak at $4.50 to $4.95 a gallon in the May-August period, he forecast.
“New Jersey, I’m hopeful, can avoid $5 a gallon,” De Haan said in an interview. But “if there are exceptional refinery issues, [New Jersey] could also get close to or hit $5 temporarily.”
“The Northeast is short on refining capacity, and when outages do happen, suddenly it jolts areas that don’t have enough of their own refining capacity much harder," he said. "And that is where a lot of the central and mid-Atlantic area is in terms of disruptions."
Prices in Philadelphia, meanwhile, are expected to peak at $4.45 a gallon to $4.95 this summer, according to the analysis GasBuddy released Dec. 28.
"The national average price of gas could cool early in the year as demand remains seasonally weak, followed by a rise that starts in late winter, bringing prices to the $4 per gallon range in time for summer," the report added.
"Barring unexpected challenges, prices in 2023 should return to normal seasonal fluctuations, rising in the spring, and dropping after Labor Day into the fall."
New Jersey’s average price at the pump for a gallon of regular unleaded gasoline was $3.31 as of Friday, according to the AAA Mid-Atlantic auto club. It peaked at a record $5.05 last June 13, as summer driving demand combined with international sanctions on Russia, a major oil supplier.
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“The normal cycle in the rise and fall of gasoline prices usually sees them bottom out in January or February, start to rise in March with the switch to summer blends and peak sometime in June, July or August during the summer driving season,” said Robert Sinclair, a spokesperson for AAA Northeast. “But nothing is normal with the war in Ukraine and the rebound from the pandemic still underway.”
Oil prices dropped in recent months due to recession fears, which soured the mood for travel, and pandemic shutdowns in China that sapped demand, according to the U.S. Energy Information Administration.
U.S. retail gasoline prices will average about $3.50 a gallon in 2023, the agency predicted in its December forecast, compared with $3.99 last year.
The average national retail price was $3.29 on Friday, according to AAA.
China's easing of its "Zero-COVID" policies — the nation was expected to lift quarantine restrictions for incoming travelers on Sunday — is expected to put new pressure on global fuel supplies, according to Fitch Solutions, the credit ratings and analysis firm.
“The return of China's crude demand to markets from both higher internal domestic consumption and increased exports of refined fuels will help buoy global fuel consumption growth for 2023,” it said in a December report. “We forecast China's fuel consumption to grow by 5.0% in 2023 in line with the strong return to growth expected.”
GasBuddy cautioned in its analysis that a China reopening “could lead to an eventual recovery in oil demand, the timing of which could greatly impact oil prices.”
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
Email: munozd@northjersey.com; Twitter: @danielmunoz100
This article originally appeared on NorthJersey.com: NJ gasoline prices could near $5 again, 2023 forecast says
