Image Source: Getty Images
Goldman Sachs has released a report indicating the necessity to increase the price of oil and gas in order to curb overconsumption habits from consumers while encouraging manufacturers to produce more.
Brent, as projected by the Wall Street bank, would have to increase the rates at $140 per barrel between the months of July and September. The projection is higher than the former forecasts putting the average at $120 per barrel.
Goldman Sachs has recommended that retailers increase gas prices for the summer in an effort to lessen demand.
According to strategists at Goldman Sachs in a report, “A large spike in prices remains quite possible this summer.”
The upswing trend will continue, says the strategists. This is not good for consumers as they project it to be more painful than expected.
Gas prices continue to rise, reaching a new high after increasing 30 cents in just one week. Now at $4.92 per gallon on average, the spike in prices totaled 62 cents in the past weeks.
Thirteen states, including Washington D.C., Maine, Massachusetts, and New Jersey, have reached the 5-dollar threshold of gas prices, breaking new records.
The states of Pennsylvania, Utah, Ohio, and Idaho are just cents less from reaching the threshold.
The analysts at Goldman Sachs encourage Brent oil to jack up the average price of each barrel to $135 – a $10 increase from its prior projections.
Goldman Sachs analysts said, “We believe oil prices need to rally further to normalize the unsustainably low levels of global oil inventories, as well as OPEC and refining spare capacities.”
Mark Zandi, a well-known economist, said, “If oil prices go to $150, we are going into recession.”
“There is no way out,” he added.
Oil prices might not drop from the average of $4 a gallon this year, according to the Energy Information Administration.
“Although we expect the current upward pressure on energy prices to lessen, high energy prices will likely remain prevalent in the United States this year and next,” EIA Administrator Joe DeCarolis said
“We continue to see historically high energy prices as a result of the economic recovery and the repercussions of Russia’s full-scale invasion of Ukraine,” the administrator added.
The EIA forecasts that by 2023, the average price of gasoline per gallon will be around $3.87, indicating that the conditions will get better as the year progresses.
Opinions expressed by CEO Weekly contributors are their own.