Gas prices are starting to shoot back up after dropping to historic lows during the height of the pandemic. In March of 2020, when the lockdown effort was in full swing across the US, the rate of travel in the country hit a new low. This caused gas prices to plummet, and, for a time, barrels of crude oil were trading at negative dollar values. This insane surplus of fuel couldn’t last forever, however.
Now, with vaccines rolling out to combat the vicious effects of the pandemic, the price of gas is going to be climbing steadily back up. While fuel was under two bucks a gallon in most parts of the US throughout 2020, expect to see that change dramatically in the months to come. Analysts predict a sharp increase in the cost of fuel as the weather gets nicer and people start heading back out after getting vaccinated.
When crude demand dropped to nearly nothing in early 2020, OPEC moved quickly to cut down on production. The oil cartel was swift to mitigate the potential losses by simply not producing oil that was going to be costlier to store than to sell. However, OPEC has been slow to pick up production at the same rate. This has led to a squeeze, driving crude up to over $60 per barrel. As a direct result, gas is about to start going up again.
Goldman Sachs has predicted that crude could get as high as $72 per barrel by the summer. This summer is expected to be full of people vacationing and traveling, as a direct consequence of everyone being stuck inside for the last year.
Another factor driving the price increase is the extremely harsh winter that the Midwest and Texas just weathered. This situation saw refineries under deep freezes that lost them valuable production time. As much as twenty percent of the country’s oil refining infrastructure was offline through much of February as Texas dealt with an unprecedented series of winter storms.
This is on top of the pandemic knocking out much of the refineries’ work forces. Refineries were forced to operate with smaller crews and under altered hours just in order to stay safe in the midst of the pandemic.
Add this all together, and you’ve got a recipe for rising gas prices that are sure to sting right in the pit of your wallet this summer.