• US gas prices are likely to surge even higher, as stockpiles dwindle and refineries struggle to keep up, Rystad Energy said Friday.
  • Wholesale gasoline prices fell this week, but the reprieve is likely temporary, according to Rystad’s Per Magnus Nysveen.
  • Refineries were battered by the coronavirus recession and are now struggling to keep up with demand for gasoline and diesel.

US gas prices are likely to surge even higher, as inventories continue to dwindle and refineries struggle to keep up with demand, energy consultancy Rystad has said.

Wholesale gasoline prices have fallen more than 10% since June 6, according to Bloomberg data. They have dropped alongside oil prices, which have cooled as investors’ concerns about a global


recession

have grown.

However, that reprieve is likely to only be temporary, Rystad Energy said in a note to clients Friday, meaning drivers can expect more fuel-price pain ahead. Gas prices have already shot up to record highs of more than $5 a gallon.

Stockpiles of refined oil products are falling sharply, and that is a key factor driving up gas prices, according to a Rystad team led by head of analysis Per Magnus Nysveen. This means there’s next to no gasoline that can be released to act as a shock absorber to keep down prices.

Oil refineries are also facing unprecedented bottlenecks, meaning they cannot produce enough refined products — such as gasoline — to meet demand.

The coronavirus crisis battered the industry, and now Russia’s invasion of Ukraine is adding to complications.

“Rystad Energy believes that gasoline’s slight contraction this week is only temporary and further upward movement can be expected,” Nysveen said in a note Friday.

“US gasoline stock levels continue their downward trend, from 246 million barrels at the beginning of Russia’s invasion of Ukraine at end-February 2022 to 217 million barrels presently.”

Read more: As inflation flares and the Fed hikes rates, UBS explains why it sees a ‘higher for longer’ oil price, and lays out how investors can capitalize on it