Gasoline prices are surging, prompting concerns of reaching $4 per gallon by May. This acceleration comes amid Russia's decision to slash oil production, pushing global crude prices upward. According to AAA, the average national price at the pump has already reached $3.53 per gallon, marking a notable increase from just a month ago.

Natasha Kaneva, a strategist at J.P. Morgan, anticipates further price spikes, foreseeing a potential breach of the $4 mark within the next two months. This projection stems from Russia's announcement to curtail nearly 500,000 barrels of oil production by June, leaving daily output around nine million barrels. Consequently, international crude oil prices have surged by 3% this month, reaching $86 per barrel. Kaneva suggests that these elevated price levels may persist, with the possibility of even testing the $100 price threshold by September.

However, while oil prices play a role, they aren't the sole driver behind the surge in gas prices. A significant portion of the price hike can be attributed to the refining process. Despite a 12% increase in crude prices this year, wholesale gasoline prices have surged by 28%. Refiners are the primary beneficiaries of these price hikes, capitalizing on reduced global refining capacity. The margin between the price of Brent crude and gasoline has widened to $28 from $13 since the year began.

This widening margin has propelled shares of leading U.S. refiner Valero Energy, which have surged by 28% year-to-date, including a remarkable 17% increase in the past month alone. Refining capacity shortages have been exacerbated by maintenance shutdowns in U.S. refineries, coupled with drone attacks that have disrupted Russian refining operations.

The situation has prompted Venezuela to import a record amount of U.S. fuel due to its own refinery challenges. Moreover, the transition to higher-quality summer blends of gasoline has further boosted refiners' profitability.

Despite the bullish outlook from J.P. Morgan, some analysts anticipate a slowdown in price increases in the coming months. Tom Kloza, global head of energy analysis at the Oil Price Information Service (OPIS), suggests that gasoline prices may stabilize between $3.50 and $3.80 from April through October as refineries ramp up capacity.

However, unforeseen factors such as extreme weather events or geopolitical tensions could disrupt this trajectory. Extreme heat or hurricanes, for instance, could knock out refining capacity, causing gasoline prices to spike once again.

Kaneva also highlights potential mitigating factors that could prevent gasoline prices from surpassing $4. The U.S. could tap into its strategic petroleum reserve to inject additional supply into the market, damping price increases. Additionally, rising gasoline prices could prompt a decline in demand, further stabilizing prices.

In conclusion, while the prospect of $4 per gallon gasoline looms, various factors, including geopolitical tensions, refining capacity constraints, and demand dynamics, will ultimately dictate the trajectory of gasoline prices in the months ahead.