Lowest July 4 Gas Prices in Five Years on the Way

Michael Green Contact Tile

 

 

 

 

 

(WASHINGTON, June 30, 2015)

Americans Have Saved $65 Billion on Gas During First Six Months of the Year

  • Lower prices have helped Americans save about $65 billion on gas so far this year, compared to the first six months of 2014, which is more than $530 for every U.S. household on average. Today’s national average price of gas is $2.77 per gallon, which is the lowest average for this date since 2010 and about 91 cents per gallon less than a year ago.
  • “It is much easier for a driver to take a summer road trip knowing that they have saved hundreds of dollars on gas so far this year,” said Avery Ash, AAA spokesman. “The gas savings should continue for the rest of the summer, which could help motivate millions of Americans to travel.”
  • AAA expects 41.9 million Americans will travel 50 miles or more for Independence Day, which is the highest total since 2007. About 35.5 million people will travel by car for the holiday. Most drivers should pay the lowest gas prices for Independence Day in at least five years.
  • S. gas prices have averaged $2.45 per gallon this year, which is the cheapest average for the first six months since 2009. During the first six months of 2014, gas prices averaged $3.52 per gallon.
  • Americans are driving more this year due to lower gas prices and a stronger economy. Gasoline demand for the first six months of the year is up about three percent compared to the same period in 2014, according to initial estimates by the Energy Information Administration. Summertime demand is even higher with the current four-week average about 4.5 percent higher than a year ago.
  • Gas prices averaged $2.78 per gallon in June, which was the lowest average for the month since 2010. By comparison, the average price of gas in June 2014 was $3.67 per gallon.
  • Gas prices remained relatively steady in June with the national average finishing the month only about three cents per gallon higher than at the beginning of the month. U.S. average gas prices are about 74 cents per gallon higher than the lows in late January.
  • Average U.S. prices reached a 2015 high of $2.80 per gallon on June 15. If this remains the highest average of the year, it would be the cheapest peak price since 2009.
  • The cost of West Texas Intermediate crude oil remained stable in June with the price settling within a relatively narrow range of $58.00-$61.26 per barrel, which has helped to prevent significant changes in the national average price of gasoline.
  • The average price of diesel is only eight cents per gallon more than gasoline today. The difference between gasoline and diesel reached its most narrow point since 2009 in June, due in part to a late peak in gas prices and seasonal factors that help reduce the cost of diesel in the summer. In January, the average price of diesel was 90 cents more expensive per gallon than gasoline.
  • Gasoline costs less than in recent years because of significantly lower crude oil costs. Crude oil remains about $50 per barrel cheaper than the highs reached in summer 2014.

 

Gas Prices May Drop this Month Due to Rising Production

  • The national average price of gas is likely to remain less than $3 per gallon this year, but there is considerable uncertainty regarding the future direction of prices. It is possible that gas prices this month will drop or at least remain relatively flat in the near term as gasoline production increases to take advantage of high profit margins. Oil prices similarly should remain near current levels given that domestic, commercial supplies are about 19 percent higher than a year ago. Nevertheless, factors such as strong summertime demand or other unexpected events could send gas prices higher.
  • “Drivers are hoping that history repeats last year’s dramatic selloff in gas prices during the second half of the summer,” continued Ash. “There is real possibility that gas prices will drop this month as millions of Americans hit the roads for their summer vacation.”
  • Fuel demand is likely to be a key factor in whether gas prices drop or increase this summer. July and August are generally the two months with the highest level of U.S. driving, which could affect supplies and prices. If gasoline stocks decline due to strong demand, it is likely that gas prices will rise. Demand generally drops significantly after Labor Day, which leads to lower gas prices in the fall.
  • There are a number of unexpected factors that could send summertime gas prices even higher than today, such as increased fighting in the Middle East, unexpected problems at major refineries or strong Atlantic hurricanes that disrupt refinery production.
  • Two international events taking place this week could help lower petroleum prices this year. First, negotiators are working on an Iranian nuclear deal, which could lead to abundant supplies of Iranian crude oil entering the markets later this autumn. Second, the effects of Greece defaulting on its debts could weaken the global economy and reduce fuel demand. Similarly, problems in Europe could lead to a stronger dollar, which generally results in lower oil prices.
  • It can be relatively common for gas prices to increase in July as more Americans take long, summer road trips. For example, gas prices increased by an average of 16 cents per gallon during the month from 2011-2013.
  • Average U.S. gas prices in July 2014 dropped for 30 out of 31 days for a total of 16 cents per gallon, due to abundant petroleum supplies worldwide. This decline was the start of an eventual $1.65 per gallon drop through January.

 

Alaska Tops Most Expensive States for Gas for the First Time Since 2011

  • Alaska because the most expensive state for gas in the country on June 27 for the first time since 2011. The five most expensive state averages include: Alaska ($3.48), California ($3.44), Hawaii ($3.38), Washington ($3.20) and Nevada ($3.19).
  • The states with the lowest average gas prices include South Carolina ($2.44), Mississippi ($2.48), Alabama ($2.50), Arkansas ($2.50) and Tennessee ($2.54).
  • About 13 percent of U.S. stations are still selling gas for more than $3 per gallon. A year ago, 99.99 percent of stations were selling gas above that price. About 15 percent of U.S. stations are still selling gas for less than $2.50 per gallon, which is about half as many as a month ago.
  • The most common price in the country today is $2.599 per gallon, which compares to $3.599 per gallon a year ago.

 

One-in-Three Americans Doubt Accuracy of Fuel Economy Ratings

  • A recent AAA survey found that 1-in-3 Americans do not believe the Environmental Protection Agency’s (EPA) new-vehicle window stickers accurately reflect real-world fuel economy.
  • AAA’s comprehensive analysis of fuel economy data submitted to the EPA’s website revealed that more than 80 percent of drivers reported fuel economy higher than the combined city and highway EPA mileage rating for their vehicle.
  • AAA independently tested three vehicles that were frequently reported as failing to achieve the EPA fuel economy and determined the EPA mileage ratings were accurate.
  • AAA concludes that driving behaviors, vehicle condition, driving environment and terrain are likely responsible for most deviations from EPA ratings that consumers experience.

Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.

AAA updates fuel price averages daily at www.FuelGaugeReport.AAA.com. Every day up to 120,000 stations are surveyed based on credit card swipes and direct feeds in cooperation with the Oil Price Information Service (OPIS) and Wright Express for unmatched statistical reliability. All average retail prices in this report are for a gallon of regular, unleaded gasoline.

For more information, contact Michael Green at 202-942-2082, trjohnson@national.aaa.com.

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