The pain at the pumps is seemingly neverending, and it’s going to seem even bleaker if prices hit $140 per barrel of oil this summer, as predicted by Goldman Sachs. According to Business Insider, the firm predicts that the price of a barrel of oil is going to rise from $125 to $140 later this summer, but that’s not the only bad news, that number will feel more like $160 per barrel by the time it gets to consumers.
The national average for a gallon of gasoline is $5 USD, and that 22% jump represented by the climb in oil prices will likely push that number up over $6 per gallon on average later this summer. With the national average diesel price now at $5.740, that number could be over $7 per gallon by July/August.
“A large spike in prices remains quite possible this summer when demand seasonally reaches its peak,” Jeff Currie, a chief commodities strategist from Goldman Sachs said.
The Russian invasion of Ukraine has prompted many countries, including the United States, to halt the production of oil from that country. This in turn has significantly lowered supply, which is driving up prices as well as increasing inflation.
The low supply and war are major issues, but they’re not the main driver of high prices. Instead, it’s the current inability to turn the raw product into gasoline and diesel that’s creating the crunch with refineries apparently experiencing an “unprecedented refining shortage” at the moment.
In order to try to cauterize the gaping wound in driver’s wallets, some states have suspended gas taxes for the rest of the year. New York is the most recent to extend the courtesy, which will cost them more than $500 million in revenue by the end of the year. It all sounds well and good, except when you consider that the actual cash saved at the pump is less than 0.50 cents of the total price.