Gas prices could reach $4/gallon by Memorial Day: GasBuddy

Yahoo Finance Live's Julie Hyman and Brian Sozzi react to GasBuddy's reported 2022 outlook for gas prices predicting they could reach $4 per gallon in addition to household spending on gas increasing.

Video transcript

- A new report out of GasBuddy predicts $4 a gallon gas could be the average nationwide by June of next year. Julie, interesting report. GasBuddy comes out with this ahead of the new year every year, and the main-- one of the main headlines is that by June, you may see averaging $4 a gallon gasoline across the country. But there are a couple other findings in here worth mentioning.

One, GasBuddy predicts the yearly household spending on gasoline next year will be about $2,341. That will be-- that would be up from $1,977 this year. And then one more finding too-- and just a reminder, I'm reminded of why I'm glad I don't live in Los Angeles-- the highest daily price for gasoline next year in LA might average close to $6 a gallon. That's just terrible. It's just terrible. You're better off walking or taking one of those scooters.

- Well, that's the point. That's exactly the point of why the prices are so high there. They want to discourage people from driving. Have you driven in LA?

- No, and I don't want to go. $6 a gallon?

- That's the whole point. You've heard of the famous

- That's tough.

- --Los Angeles smog. Like, gas taxes are in part to discourage people from driving so much. Listen, I think we also have to-- if we're looking or look at the amount that people are going to spend on gasoline next year, we also have to look at it as a percentage of household spending, right? So it's only going to become clear over time what household income will be next year. Will we continue to see incomes go higher in 2022? You know, nobody likes to pay more for gas, but we have seen the share of household spend go down, to some extent, over the past few years.

Are we also going to see a push into further into electric vehicles? To come back to one of the themes we were talking about earlier in the show. Traditionally, when we've seen these increase in gas prices, we have seen then a downtick in sales of things like SUVs, for example, that have lower gas efficiency.

So now, are we going to see a renewed wave, especially now that there are more choices in terms of electric and hybrid vehicles? Will we see another wave of that being pushed? What's that going to do to vehicle prices? So this whole gasoline dynamic really feeds into a lot of other kinds of dynamics that we can watch here in the market, I think.

- Right. And it's not just-- it's not just the price us consumers pay at the pump, Julie. Of course, this also feeds its way into diesel. GasBuddy also suggesting that diesel prices will see inflation next year as well. That diesel, of course, still powers lots of logistics networks and trucks, and you have to start wondering, does a Walmart and Target, do they have to come out here and raise prices because of this inflation? To be determined. But Julie, wow, $6 a gallon gasoline. That would be a big wallet buster. Big.

- Yeah. Don't move to California. There you go.

- Not moving there.

- Problem solved.

- Not moving there.

- Problem solved.

- All right.

- [INAUDIBLE].

- Fair enough.