BMI Projects Gasoline Price Through to 2026

BMI, a Fitch Solutions company, has revealed its newest NYMEX RBOB gasoline price forecasts through to 2026 in a new report sent to Rigzone recently.

The company now sees the commodity averaging $2.55 per gallon in 2023, $2.26 per gallon in 2024, $2.22 per gallon in 2025, and $2.20 per gallon in 2026. A Bloomberg Consensus published in the report sees the commodity coming in at $2.56 per gallon this year, $2.70 per gallon next year, $2.65 per gallon in 2025, and $2.94 per gallon in 2026.

In a separate report sent to Rigzone back in February, Fitch Solutions Country Risk & Industry Research saw the commodity averaging $2.70 per gallon in 2023, $2.38 per gallon in 2024, $2.34 per gallon in 2025, and $2.24 per gallon in 2026. A Bloomberg Consensus highlighted in that report projected that the commodity would hit $2.79 per gallon this year, $2.86 per gallon in 2024, $2.50 per gallon in 2025, and $2.31 per gallon in 2026.

“This quarter we revised our gasoline price for 2023 from $2.70 per gallon to $2.55 per gallon, which marks a six percent reduction from our last forecast,” BMI analysts stated in the latest report.

“Our current gasoline price forecast reflects the weakness on the broader oil markets experienced over January-May 2023 and our updated oil price view. We now expect Brent prices to average at $85 per barrel in 2023, down from our initial forecast of $95 per barrel,” the analysts added.

“At the same time, we highlight wider than initially expected crack spreads which moderate gasoline price declines. On balance however, the impact of oil price weakness outbalances higher crack spreads, leading to a downward gasoline price revision this quarter,” the analysts went on to note.

In another report sent to Rigzone in March, Fitch Solutions Country Risk & Industry Research outlined that gasoline prices had been trading broadly sideways over the initial two months of 2023, “ranging between $2.24 per gallon and $2.70 per gallon”.

“Gasoline prices have broadly followed crude oil benchmarks over January-February 2023 and traded sideways in a 50-cents range,” the analysts stated at the time.

The Relationship Between RBOB and Retail

The oil and gas team at Fitch Solutions has previously outlined to Rigzone that the relationship between RBOB and retail prices is useful for directional trends as well as volatility. Retail prices are a mix of taxes, local blending requirements, profit margin, and delivery costs, as well as other factors, and retailers purchase supply at varying amounts from both spot and futures contracted volumes, the Fitch Solutions team highlighted to Rigzone back in 2022. RBOB, being the only widely traded spot and futures contract, provides a good proxy for future pricing trends and the ability to secure supply at a fixed price as the contracts are physical, the team stated at the time.

In its latest short term energy outlook, which was released on May 9, the U.S. Energy Information Administration (EIA) projected that the U.S. retail gasoline price would average $3.33 per gallon this year and $3.09 per gallon next year. In its previous STEO, which was published on April 11, the EIA saw the retail price for regular gasoline averaging $3.42 per gallon in 2023 and $3.18 per gallon in 2024.

What Do You Pay For in a Gallon of Gas?

According to the EIA’s latest fuel update, which was released on May 8 and which pegged the price of regular gasoline at $3.42 per gallon in March, 50 percent of that total went on crude oil costs, 24 percent went towards refining costs, 15 percent went towards taxes, and 11 percent went towards distribution and marketing costs.

A separate EIA fuel update released on December 27, which pegged the price of regular gasoline at $3.69 per gallon last November, outlined that 55 percent of that total went towards crude oil costs, 18 percent went towards distribution and marketing costs, 14 percent went towards taxes, and 13 percent went towards refining costs.

As of May 15, the average price of U.S. regular gasoline is $3.535 per gallon, according to the AAA Gas Prices website. Yesterday’s average was $3.534 per gallon, the week ago average was $3.537 per gallon, the month ago average was $3.668 per gallon, and the year ago average was $4.470 per gallon, the AAA site showed.

To contact the author, email andreas.exarheas@rigzone.com