Cheapest Summer Gas Prices since 2009 on the Way

Michael Green Contact Tile

Lower Gas Prices Inspiring Summer Road Trips

  • Today’s national average price of gas is $2.75 per gallon, which is the highest average of the year. There is a good chance that average U.S. gas prices will drop soon due to stabilizing crude oil costs and as refineries complete seasonal maintenance, which would result in the cheapest summertime gas prices since 2009.
  • “This could be the year of the summer road trip with lower gas prices motivating millions of people to travel,” said Avery Ash, AAA spokesman. “Many drivers are likely to save hundreds of dollars this summer as gas prices remain more affordable than in recent years.”
  • Summer travel is expected to be busy, in part due to lower gas prices. About 6 in 10 Americans say they are more likely to take a road trip of 50 miles or more in 2015 if gas prices remain near recent levels, according to a AAA survey. AAA forecast that 33 million people would drive for Memorial Day weekend, which was the highest total in a decade.
  • The Energy Information Administration (EIA) recently estimated that gasoline demand for the week leading up to Memorial Day was the highest weekly total since August 2007, which may also indicate that many people are taking advantage of lower gas prices to travel.
  • Supplies of both oil and gasoline remain abundant, which should help keep gas prices much lower than in recent years. U.S. commercial crude oil stocks are about 22 percent higher than a year ago, while gasoline stocks are about four percent higher than last year, according to the EIA.
  • Gas prices often drop or remain flat in June as refineries complete seasonal maintenance and gear up production for the busy summer driving season. Gas prices have declined by an average of 12 cents per gallon in June over the past five years. This production trend likely will continue this year, which means gasoline supplies could soon grow even more plentiful.
  • S. oil production may have reached a balance in supply and demand given that many producers reportedly can break even with oil at $50-$60 per barrel. Domestic oil prices may not rise significantly in the near term because any further increase in price could lead to a rise in production, which likely would return prices lower.
  • OPEC is scheduled to meet on June 5 to determine production quotas going forward. Most analysts do not expect the organization to announce major changes during the meeting, but any surprises could have a significant impact on gas prices.
  • Despite expectations for lower prices, there are a number of 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.

Average Gas Prices Jump at Fastest Seasonal Pace in Three Years

  • Average U.S. prices have increased by 71 cents per gallon since late January, which is the largest seasonal increase since 2012. Average prices increased 26 out of 31 days in May for a total of 17 cents per gallon, making it the largest increase for the month since 2009.
  • “Gas prices have jumped much faster this spring than we typically see because of seasonal refinery issues and rising oil costs,” continued Ash. “The pain has been less costly than in the past though because gasoline remains a relative bargain in most areas compared to recent years.”
  • Gas prices have increased since January due to a combination of rising crude oil costs, seasonal refinery maintenance, unexpected refinery problems and the switchover to summer-blend gasoline.
  • The cost of crude oil has increased by about $15 per barrel since reaching a six-year low in the middle of March. Oil is the primary cost associated with producing gasoline and any increase in the cost of oil generally leads to higher gas prices. Crude oil prices have increased this spring primarily due to slowing U.S. production and continued risks associated with conflict in the Middle East.
  • Many refineries conduct maintenance in the spring to prepare equipment for production during the busy summer driving season. Refineries conducting maintenance generally produce less gasoline, which can lead to tighter supplies and higher prices. In addition, unexpected refinery problems at this time of year can make the supply situation even worse and lead to a surge in regional prices.
  • Gas stations in many parts of the country switch to summer-blend gasoline by June 1. This blend reduces smog and improves air quality at higher temperatures, but it costs slightly more to produce.
  • The average price of gas in May was $2.69 per gallon, which was the lowest average for the month since 2009. By comparison, the average price of gas in May 2014 was nearly $1 per gallon more expensive at $3.66 per gallon.
  • Gasoline costs less than in recent years because of significantly lower crude oil costs. Despite recent increases, crude oil remains about $50 per barrel cheaper than the highs reached in summer 2014. Crude oil prices dropped during the second half of 2014 due to abundant global supplies and production. The most recent settlement price for WTI crude was $60.30 per barrel.
  • Gas prices on the West Coast continue to be the highest in the nation due to regional refinery problems. California’s average has been the most expensive in the country for almost every day since February 26, when California’s average climbed above Hawaii for the first time since October 2012. California’s prices began to jump in February following an explosion at the ExxonMobil refinery in Torrance, Calif., which has helped limit fuel production across the region. The region likely will continue paying among the highest prices in the country this summer, though California’s average has dropped about 12 cents per gallon since the middle of May.

$3 per Gallon Gasoline Far Too Common in the Western United States

  • The only states in the country with average gas prices above $3 per gallon are in the western United States. The states with average prices above $3 per gallon include: California ($3.70), Hawaii ($3.30), Nevada ($3.30), Alaska ($3.30), Washington ($3.06), Oregon ($3.03) and Utah ($3.03).
  • In the central and southeastern United States it is still relatively common to find gas for under $2.50 per gallon. The states with average prices below $2.50 per gallon include: Mississippi ($2.44), South Carolina ($2.44), Oklahoma ($2.46), Arkansas ($2.47), Louisiana ($2.48), Missouri ($2.48), Tennessee ($2.49) and Alabama ($2.49).
  • About 87 percent of U.S. stations are still selling gas for less than $3 per gallon. A year ago, 99.99 percent of stations were selling gas above that price. About 25 percent of U.S. stations are still selling gas for less than $2.50 per gallon.
  • The most common price in the country today is $2.599 per gallon, which compares to $3.599 per gallon a year ago.

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, AGross@national.aaa.com.

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