As Texans drive to work, to school, to family outings, or for pleasure, they are wondering when they will see relief at the gas pump. With gas prices consistently going up and down over the years, it’s tough to predict when gas prices will go down in Texas. Nevertheless, analyzing market trends, events, stabilizations, and the economy, might lead to a plausible solution. In this article, we aim to answer some essential questions that are on the minds of many Texans.
Will Gas Prices Go Down in 2023?
As much as people would love to know the answer to this question, it remains difficult to make a precise prediction about the gas prices in 2023. The future of gas prices is driven by various unforeseeable factors, including geopolitical incidents, natural weather catastrophes, global pandemics, or typical economic demand and supply principles.
The U.S Energy Administration, however, predicts that the average price of regular gasoline to average $2.77 per gallon in 2023 compared to $2.80 in 2022. Though this might not seem like a significant price difference, it could mean a lot to someone who drives frequently, as even a few cents difference in gas prices can help them save money.
Why Are Texas Gas Prices Going Up?
Gas prices in Texas are influenced by several factors, some of which are beyond human control.
The first major factor is the crude oil barrel price, which represents the primary cost associated with creating gasoline. Crude oil accounts for about two-thirds of the cost of producing gasoline. Therefore, when crude oil production is low, or the demand for it exceeds its supply, the price of gasoline in Texas and other states can increase.
A second factor is gas taxes, which are set by the state government. As of July 2021, Texas gas taxes are approximately 38.4 cents per gallon, which ranks as the nineteenth highest rate of all states. Therefore, when the gas tax increases, the final price of gasoline will also increase.
A third factor is refineries’ production capacity. Gasoline production involves processing the crude oil. When refineries are damaged due to natural disasters like Hurricane Harvey, or fail to meet their processing quotas, this reduces the supply of gasoline, thereby increasing the final price.
Are Gas Prices Lower in Texas?
Gas prices in Texas depend mainly on supply and demand, but they seem to be lower than in some states like California. According to GasBuddy, a mobile app that tracks gas stations’ pricing in the US and Canada, Texas’ average gas price as of September 2021 is $2.84 per gallon, slightly lower than the national average price of $2.85 per gallon.
Furthermore, in January 2020, Texas’ statewide gasoline average was $2.29 per gallon, which is more than 50 cents per gallon less than California’s average for the same period. Therefore, although Texas’ gasoline prices may fluctuate, they generally remain on the lower side compared to some states.
How High Will Gas Prices Be in 2023?
Although it’s not possible to predict gas prices in 2023, there are several market trends that could determine the price of gas in Texas and other US states.
For instance, Brent crude oil prices, which represents international crude oil benchmark prices, are most likely to increase by approximately $5 per barrel in 2023, following a significant reduction in production during the COVID-19 pandemic.
Furthermore, according to Bloomberg, the demand for gasoline in the US has taken a shift, with more people using electric cars or public transport. Before the pandemic began, U.S demand for gasoline was 9.3 million barrels of oil per day, which dropped significantly during the pandemic when people stayed indoors. As of August 2021, the demand has reduced to approximately 8.8 million barrels of oil per day. It’s likely that the demand for oil and gasoline will gradually increase as life gets back to normal.
Finally, concerns about climate change and the government’s commitment to enforcing regulations that reduce carbon emissions could limit supply and production costs of crude oil, leading to higher gasoline prices.