Fill ’er up; gas prices are staying down
For 4th straight year, average forecast to fall
Gas prices are expected to drop for a fourth consecutive year despite geopolitical instability in the Middle East, spelling a prolonged period of relief for consumers.
Analysts still predict prices to rise a bit in the summer months, when the normal spike occurs because of the costlier warmweather fuel mix and the increased demand, but they say prices will end the year back in the basement.
In a fresh report released to USA TODAY, GasBuddy.com analysts projected that the price of a gallon of gas will reach a national average high of $2.63 in May, up from $1.97 in January.
Rock-bottom oil prices will prevent gas from going any higher, according to GasBuddy, which expects gas to average $2.01 by year’s end.
The projected average of $2.28 for 2016 would mark the fourth consecutive year of lower gas prices. Prices were below $2 at more than 7 in 10 pumps nationwide at the end of 2015, AAA says.
“Gas prices always go up for the summer, but we’re still talking oil inventories that are just in excess of what we’ve ever seen,” said Patrick DeHaan, head petroleum analyst at GasBuddy. That robust supply of oil is helping keep prices low. The global oil glut — coupled with a tepid economic outlook and concerns about North Korea’s hydrogen bomb claims — sent the price of crude lower Wednesday.
Tension between Saudi Arabia and Iran over Saudi Arabia’s execution of a renowned Shiite cleric has led to speculation over the prospect of instability in the Middle East. But rather than bolster oil prices, it’s more likely to cause both sides to jockey for market share, keeping oil production high and gasoline prices low, DeHaan said.
There’s one exception to the low-gas-price rule: California. The production outage at Exxon Mobil’s refinery in Torrance, Calif., which produces up to 10% of the state’s environmentally stringent gasoline mix, will continue to batter the Los Angeles area this year, where gas prices will peak from $3.75 to $4.25, according to GasBuddy.