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Goldman Sachs has released a report stating that if the price of oil and gas remains high, it will encourage manufacturers to produce more while discouraging consumption among Americans.
The current rate of one oil barrel is $120. However, the Wall Street bank said that Brent would increase the average rate to $140 a barrel between the months of July and September.
Goldman Sachs is trying to lessen the demand for gas by telling consumers to increase its prices this summer.
“A large spike in prices remains quite possible this summer,” said strategists at Goldman Sachs.
Consumers are set to take a hit as the upswing trend continues, say strategists.
Gasoline prices are on the rise, and it doesn’t look like they’ll be stopping anytime soon. The national average price for gas has increased 30 cents over last week’s rate at $4.92 per gallon – now costing nearly 62 cents more than months ago.
As the price of gasoline continues to rise, states across America have reached $5 per gallon. A total of 13 states, including Washington D.C., New Jersey, Maine, and Massachusetts, have all reached the threshold.
The states of Pennsylvania, Utah, Ohio, and Idaho are almost at the threshold as well.
Goldman Sachs advises Brent oil to jack up the price of a barrel to $135, which is $10 more than its previous projections.
“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,” the analysts said in the report.
“If oil prices go to $150, we are going into recession. There is no way out,” said Mark Zandi, a well-known economist.
Oil prices might no longer drop from the average of $4 a gallon this year, according to data released by U.S 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,” said Joe DeCarolis, EIA Administrator.
“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,” DeCarolis added.
Fortunately, the EIA has forecasts that show the trend of gas prices going down in 2023. The average price per gallon is estimated at $3.87 in their initial forecast.