NJ Gas Prices to Wobble, then Spike in Spring – Analyst
Gas prices have been wobbly lately in New Jersey -- up, down, now back up again in the last few days, with the average price for a gallon of regular sitting at $3.42 compared to $2.29 a year ago at this time.
Global Head of Energy Analysis for the Oil Price Information Service, Tom Kloza, said one reason for the bounce back in gas prices is that it appears the omicron variant of COVID-19 does not seem to be as frightening as once thought. This has led to conclusions that mobility won't stop and people will continue driving around.
"I think you're going to see a confusing picture right now. You're going to see some of the off-price leaders drop their numbers in New Jersey. But you still may see the price averages up around $3.40 or so," Kloza said.
This speaks to the difficulty of being a gasoline retailer.
Kloza said if they cut their prices 25 cents last week when the market dropped, they're probably going to be in trouble this week as the market moved back up around 10 cents.
Considering it's winter, Kloza said the gas prices are high right now, especially since people tend to drive less in the cooler months. And he doesn't expect the high prices to normalize anytime soon because there's a lot of money pouring into commodities right now.
Kloza also expects gas prices to spike higher in the spring, like they did in 2008 and from 2011 through 2014, pointing the finger at refineries that have been closed and idled as opposed to demand.
"Be careful what you wish for," said Kloza, adding that if gas prices do slide, it will be tied to COVID worries and COVID resurgence.
"I think I'd rather be paying $4 a gallon for gasoline in the spring, knowing we're on the other side of COVID, than paying $2.75 and worrying about the omicron variant," said Kloza.
Even though Kloza is predicting a gas price hike in the spring, it will not be the new normal. By the end of 2022, he believes crude oil prices will be lower and gasoline will be better supplied.
"It might be a tough late winter and spring, but I don't think it's going to be a tough second half of 2022," said Kloza.