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Data: Forecasting gas prices into 2023

Gas pump
Posted at 7:55 PM, May 31, 2022
and last updated 2022-05-31 23:05:53-04

PHOENIX — Forecasting gasoline prices is a tricky business.

There are many variables to consider when talking about the price of gas, but some are more important than others. The price of crude oil always tops the list. Even more so today. The US Energy Information Agency reports that the cost of oil makes up 60% of the cost that we pay for a gallon of regular gasoline.

This is typically the case; over time the price of gas and oil move in tandem. Gas prices after 2014 have remained relatively higher when compared to oil prices. Recent data taken after March 2020 confirms the continued trend. Spot prices for WTI Oil, a US benchmark, are not coming down. Based on the recent trends, oil would need to fall to about $80 a barrel and remain there if Arizona gas prices are going to get back under $4 on average.

The EIA short-term outlook on prices forecasts that oil prices will remain high for the remainder of the year and going into 2023, but it does not foresee a dramatic rise in prices that has been a common occurrence in the past year years.

The good news, if you can call it that, is while gas prices are expected by the EIA to remain high into 2023, quickly surging prices may be at an end. Aside from the price of oil, the other reason for this may be demand.

The US Energy Information Agency now says that the 4-week average of gas demand in 2022 is under where it was at the same time last year. If slowing demand continues, we may see a little break in gas price increases.