In December of 2021, the Biden administration forecasted that gas prices would drop below $3 per gallon, but seven months later gas prices reached over $5 per gallon, more than doubling since President Joe Biden assumed office.
According to Biden’s Energy Information Administration (EIA), gas prices were likely to drop because oil production would outpace demand, CNN reported:
Prices at the pump have finally started to creep lower, and that trend should significantly accelerate in the coming months, according to new government forecasts.
The US Energy Information Administration said Tuesday the national average for regular gasoline will probably drop to $3.01 a gallon in January. For 2022, gas prices are expected to average $2.88.
That call is based on projections by the EIA for global oil production to increase more quickly than demand next year — especially given the emergence of the Omicron variant. This would be a reversal of the past 18 months, when output has been slow to meet surging demand as the world reopens from Covid-19.
Biden’s EIA forecast was not the only grossly incorrect prediction. Citigroup posited that “the energy boom” that was “fanning the flames of inflation is over.” However, inflation remains a permanent fixture of Biden’s presidency; the Consumer Price Index (CPI) rose to a 40-year high in May, while gasoline has increased over 48 percent in the last 12 months, according to the Bureau of Labor Statistics.
Not all big banks incorrectly predicted gas prices. JPMorgan forecasted the price of oil to increase, raising gas prices to $5 gallon, CNN reported.
As evidenced, JPMorgan’s prediction was correct; gas prices reached a $5 average in June. Biden’s EIA now estimates Americans will pay $450 more for gas in 2022 than they did last year on an inflation-adjusted basis.
JPMorgan made another prediction in May, suggesting that gas prices could increase to more than $6.00 per gallon before Labor Day.