Average U.S. gasoline prices will reach $5 a gallon before the November midterm elections, according to Jeff Currie, founder and CEO of Real Macro and former head of commodities research at Goldman Sachs. The forecast, made Friday on Bloomberg Television, is grounded in a structural shortage of refining flexibility, not cyclical demand swings.
Diesel prices already signal this constraint. The national average hit a record $6.0556 per gallon, up 14 percent in a month and 60 percent year-over-year, according to AAA data. Regular gasoline trades near $4.27.
Currie's thesis rests on a specific bottleneck: refiners can shift production between gasoline and diesel within limits, but global demand for diesel is pushing those limits. Chinese refiners have restarted capacity to capture diesel cracks that have expanded to $110 per barrel—a profit margin that exceeds the cost of crude feeding the units. "That's a pretty big profit," Currie said Thursday on CNBC. "They start chasing it, and it was just like an earthquake going through here."
Diesel prices could climb to $7-$9 per gallon before pressure eases, Currie estimated. Brent crude, which nearly touched $110 overnight, slipped to around $103 by Friday morning. The benchmark has risen over 70 percent this year.
Currie characterized the dynamic as "the old economy taking its revenge"—visible in rates and commodity markets alike. "This is not transient. It has a different flavor to it," he said. Brent's push above $107 this week, he added, is "harder to dismiss as a temporary shock."
Geopolitical risk amplifies the supply constraint. A disrupted Strait of Hormuz and Houthi claims of strikes on Saudi Arabia's East-West pipeline—the kingdom's primary route to the Red Sea—have tightened crude flows. The International Energy Agency warned that soaring fuel costs could trigger demand destruction and flagged a potential 5.7 million barrels per day supply plunge. Helima Cro of RBC Capital Markets noted that a full-scale Saudi-Houthi conflict could drive oil to levels consistent with the firm's high-price scenario.
Retail impact is broad. Patrick De Haan of GasBuddy said record diesel prices will ripple through supply chains: "every cargo, shipment, every delivery Americans are taking" will cost more. Persistent geopolitical tensions could push holiday-season costs higher for consumers nationwide.
