Gas: An extreme hurricane season could push prices to $4

Gas prices are expected to rise this summer by about $0.10 per gallon, according to the Energy Information Administration. The increase is due to summer travel demand amid falling refinery capacity. Weather forecasters at Colorado State University also predict that hurricane season will be “extremely active” with a chance of a major storm hitting the Gulf of Mexico, an important region for US energy needs.

GasBuddy Head of Petroleum Analysis Patrick De Haan joins Wealth! to break down what drivers can expect at the pump this summer and potential disruptions to energy resources.

De Haan argues that prices may be affected by hurricane season, which usually begins in August: "That's why for the month of August our projection is that we could either see prices lower in August if supplies continue to build, or we could see a brief blip. If we do see a major hurricane, it is still possible that the national average could jump close to $4. In a worst-case scenario."

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video transcript

Gas prices are expected to rise this summer by about 10 cents per gallon amid falling refinery capacity and higher refining costs.

That's according to new data from the Energy Information Administration.

So what will this mean for drivers in the weeks and months ahead as we get into the busy summer travel season?

Joining me now to discuss good friend of the show, Patrick Deja, who was the gas buddy head of petroleum analysis.

Great to see you, Patrick.

We went to you specifically on this topic because people are trying to figure out, ok, what should we be expecting as we're hopping in the car, packing up the family and getting ready to go to, to wherever we decide to go to get some R and R?

Well, thanks for having me back.

And as you mentioned, the EI a recently revised upward its forecast for gas prices this summer.

I would take the underside of this bet.

However, the ei a predicting a jump of 10 cents to about 370 a gallon.

I would point out though that we hit 369 about a month ago.

Now we've actually seen the national average fall 10 cents as we approach Memorial Day.

Yes, hurricanes it can happen.

Gas prices coming down ahead of the holiday.

I don't think we'll see an average of 370.

I will point out though there certainly is risk in the month of August.

A major hurricane certainly could impact prices.

But for now, uh, I'm expecting average gas prices this summer to stay probably in the mid $3 a gallon range.

The exception, of course, the west coast California should see prices falling back below $5.

But I think for the rest of this, it's going to be a eerily similar uh pump, uh uh price of the pump this summer compared to what we saw last year.

You know, II I know that you're not a climatologist, but you just mentioned something really interesting there, Patrick, which is, of course, the give and take or the, the relationship between the weather systems and gas demand as well.

What are the anticipations there?

Well, it, it certainly could be a very busy one, at least that's what those forecasters tell us.

The Colorado State University and uh the National Weather Service both indicating it's going to be a very busy hurricane season because of El Nino conditions.

In fact, uh Colorado State University puts the odds that about 40% of a major storm entering the Gulf of Mexico.

Of course, that would be very bad news.

Many of the nation's largest refineries, of course, not only hit by severe weather last night.

But a lot of those lie between Houston and New Orleans and Louisiana and Texas.

So any major storm going into the Gulf of Mexico certainly would be bad news.

I would mention the peak of hurricane season.

It does take a little bit of time for hurricane season to reach its peak.

That usually happens in August.

And that's why for the month of August, our projection is that we could either see prices lower in August if supplies continue to build or we could see a brief blip.

If we do see a major hurricane, it is still possible that the national average could jump close to $4 in a worst case scenario when people are typically booking air travel, they're always told or frequently told.

Hey, yeah, book on Tuesdays because that's the time where you're gonna get the most deals.

It's not the same that you can apply to win to fill up the tank.

But if there are tips or tricks that people can lean into to try and mitigate some of the costs at the pump, what could they be?

Yeah, there's a lot of those tips, things like driving more fuel efficiently, certainly can increase the amount of miles you get out of every tank when you have to fill your tank, making sure you're getting the best deal.

Apps like gas buddy Google or ways will point you in those right directions being mindful of state lines for those traveling on longer road trips this summer.

Those state lines, uh, are basically danger zones for gas prices.

I just traveled down to Mississippi a couple of days ago, traveling out of Illinois into Kentucky.

You'll see gas prices basically fall 30 to 40 cents, uh, things like, uh, routing your trip.

Uh, certainly using Google to map a more efficient route.

Uh, there is a fuel efficiency route that they do have in their app.

And when you pay for that gasoline too, after you find a good price station checking out if there's a free loyalty program, things like fuel rewards.

A lot of stations have those loyalty programs that roll back your price.

So there's a lot of different ways nobody should be paying what that street sign says this summer and, and just lastly while we have you here, Patrick, because we, there are a lot of the superstores that will have their own rewards programs as well with gas stations annexed.

Is there one that's winning that battle versus others?

Well, you know, certainly what some of the wholesale clubs stand out.

Costco in particular, they do a really great job with an aggressively low gas price to get people to their location.

Um But there, there's not really a whole lot of other standouts, right?

Costco often has a very low everyday gas price.

Um But even that has been shrinking a little bit in the last couple of years, I would say that there's a lot of loyalty programs out there.

Fuel rewards.

BP.

A lot of the major oil companies have fuel rewards.

You mentioned, uh, uh, uh, uh, the supermarkets as well.

Kroger have, uh, loyalty programs.

They team up with shell, I believe in some instances.

I would just employ a lot of folks to go out there and make sure if you're buying groceries, there's certainly the opportunity, whether you have a loyalty program or a credit card that will give you rebates or rewards.

There's a lot of ways out there, uh, to reduce what you're paying at the pump.