Goldman Sachs analysts believe that oil prices will move to $107 a barrel. Based on how oil and gasoline prices rise in tandem, a gallon of regular gas should be about $5. (These states have the highest and lowest gas taxes.)
[in-text-ad]
The primary reason that oil will rise to a much higher level is supply cuts by Saudi Arabia and Russia, two of the largest suppliers in the world. The United States is also on this list but cannot pump enough oil to offset these declines. Presumably, Saudi Arabia wants to add more money to its national treasury. The Russian decision is more geopolitical.
The price of oil is about $88 a barrel, up from $67 in June. The current price for an average gallon of regular nationwide is nearly $4.
Gas prices reached $5 for the first time last June. Russia’s invasion of Ukraine cut supply. China’s economy was doing well. China is the world’s largest consumer of crude, and therefore demand rose.
What does $5 gas mean? First, household budgets will be damaged. This is particularly true of lower- and middle-class households. This, in turn, threatens the upcoming holiday season. Some retailers make all of their profits in the fourth quarter.
Other industries hit hard by high fuel prices include airlines and trucking.
At $5, gas prices raise the specter of recession. Goldman Sachs said a few days ago that the chance of a recession in the near term had dropped to 15%. With gas at $5 a gallon, that forecast is wrong.
Take Charge of Your Retirement In Just A Few Minutes (Sponsor)
Retirement planning doesn’t have to feel overwhelming. The key is finding expert guidance—and SmartAsset’s made it easier than ever for you to connect with a vetted financial advisor.
Here’s how it works:
- Answer a Few Simple Questions. Tell us a bit about your goals and preferences—it only takes a few minutes!
- Get Matched with Vetted Advisors Our smart tool matches you with up to three pre-screened, vetted advisors who serve your area and are held to a fiduciary standard to act in your best interests. Click here to begin
- Choose Your Fit Review their profiles, schedule an introductory call (or meet in person), and select the advisor who feel is right for you.
Why wait? Start building the retirement you’ve always dreamed of. Click here to get started today!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.