The average price of gas in the U.S. just hit a new record high of $4.37, up 25 percent since Russia invaded Ukraine. Patrick DeHaan, head of petroleum analysis at GasBuddy, joined Cheddar News to talk about the future of gas prices in America — and whether or not they could hit $5 a gallon. "Well, I still think given what we know today that that is improbable, but it's not impossible," DeHaan said in response to the possibility of hitting that milestone this summer. He noted that with supplies so constrained, the consumption side may be the only form of control consumers may have, such as drivers reducing speed during highway driving.

Closing Bell

GasBuddy's Patrick Dehaan Sees $5 Gas This Summer as Unlikely — But Not Impossible

Let's switch gears here though. Americans feeling the pain at the pump as average. Us gas prices hit another record high today of $4.37 surpassing the previous record set back in March. Well, gas prices up 25% since Russia's invasion of Ukraine. While inflation and dwindling oil supply are affecting almost every aspect of americans lives. The million dollar question is when the prices go down and joining me now, is Patrick DeHaan, head of petroleum analysis at Gasbuddy Patrick, it's great to have you on the show. What are you seeing as the biggest factor driving prices up right now? Well, thanks for having me. I certainly think gas price reversal that we've seen in the last few weeks was fueled by a jump in WT I uh, last week of about $9 a barrel. That coming after the EU is making it more clear that it's going to be pursuing energy sanctions on Russia's oil sector, which is going to further widen the imbalance between supply and demand globally. And that's behind what we're seeing across much of the country with Not only gasoline, but keep in mind the price of diesel now 555 a gallon impressive. And that has yet to be passed along in the form of higher costs of goods at the nation's grocery stores, clothing stores, hardware stores et cetera. I want president biden discussing rising gas prices in his inflation pressure earlier today. Let's take a listen to what the president had to say Right now. Oil companies are sitting on 9000 unused leases oil leases, which are the property of the federal government on the property. Under my plan, they would have to pay taxes and if they don't use those leases to produce more oil, just can't sit on it. Unlike under Republican plan, they'd be allowed to continue to sit on this land without producing while shipping record profits back to their investors. Patrick, does the White House have the power to get these soaring gas prices in check. We'll certainly hear the frustration and the President's voice trying to bring down the price of gasoline, but I don't think it's going to be accomplished by either taxing oil companies or further dis incentivizing them and essentially being a bit more hostile to the oil and gas sector. Clearly, that's a strategy that hasn't worked to increase production. High prices may incentivize oil companies, but I think the rhetoric from the White House give some of these oil companies pause in terms of increasing, uh, increasing output or at least increasing investment. You know, another question that I have for you is Saudi Arabia warning that the world is running out of energy capacity at all levels. Do you agree with that statement? Well, I think, you know, the Saudi Arabia, certainly you have to look at at where these words are coming from. Saudi Arabia's interest. Obviously with Saudi Aramco is to hype up the end of energy and to push oil prices higher. We've already seen its reluctance to increase oil production. Saudi Arabia really the only opec member that may have a small amount of spare capacity. So it's not surprising that they're trying to drum up the price of oil. I think the writing's on the wall. The President obviously wants to move the nation away from fossil fuels and so you know what we're seeing is maybe a quite a bit of an enhancement, a little bit of hyperbole from the Saudis. But not surprising given the stance on oil. Yeah, I agree with you there. I'm glad you pointed that out for americans who are trying to budget for their summer travel plans. What should they be accounted for when it comes to gas prices, Patrick, how high could they rise? I certainly don't think they're, the foundation has been laid for some more increases here later this year. Especially contingent on what may develop between Russia and Ukraine. And keep in mind it's what happens with Russia or I should say how the west may respond that could send oil prices up and gas prices up further this summer. So for motorists, you'll want to dig deeper, prepared to spend more And potentially just reducing your, your speed on the nation's highways could help you increase your fuel efficiency by 20% or so. So obviously going to be a painful summer. I don't expect much meaningful improvement, but we could see prices trending even more north compared to where they are today. So what's the impetus to send prices lower? Patrick of course at the same time we see a big push and investments to the tunes of billions of dollars, both both from corporate America and the president to invest in electric vehicles that don't rely on gasoline. But those TVs are still pretty pricey. So I don't think that's gonna happen that transition tomorrow. How can we bring these prices down and when might that happen? Well I mean right now we're we're kind of certainly stuck with the supply aspect of the equation that doesn't look to improve anytime soon. Obviously increases in U. S. Oil production have been pretty small poultry so far this year, the national or I should say U. S. Domestic oil production now at about 11.9 million barrels. So really the supply equation is not, we're going to find much improvement. I mean that's obvious. I think really the only side of the equation that we have more control over is potentially consumption. But again, there's there's not a whole lot, they're either coming out of the pandemic americans obviously want to hit the road. Uh there's a very high level of demand. But if americans and you know if we saw a little bit more or reduced consumption, we may see improvement and keep in mind some of the third world countries, some of the airlines in Africa for example already curbing flights in response to the high price of jet fuel. But it's going to take a lot more of that type of story to move the needle. So gas prices hitting a record high today of $4.37 according to triple A. Could we see gas prices rise to $5 at the pump by this summer? Well, I still think given what we know today that that is improbable, but it's not impossible. Obviously, we're running a very tight ship. I think my concern going into the summer or hurricane season is the fact that US refining capacity is down a million barrels a day compared to its peak level early 2019. And so having said that as demand goes up this summer, we're recovering from Covid there's going to be likely higher demand this summer. My concern is hurricane season. We're just one major refinery shutdown. A temporary shutdown away from seeing an inability to potentially meet the rising demand. All right, we got to leave it there. Patrick DeHaan, head of petroleum Analysis, a gas buddy. Patrick, thanks for the insight. We appreciate it.