Gas prices fall before Memorial Day

At start of the year, analysts predicted up to $3 a gallon

The road to Memorial Day typically pumps up gasoline prices as motorists gear up for summer travel. Not this year. Gas prices are suddenly falling as oil prices plummet.

The price of a gallon of regular fell 4 cents a gallon in the past week.

The Energy Information Ad- ministration reported Monday that the nationwide average price of gas is $2.37, down from $2.41. A few pennies a gallon may not sound like a lot, but the savings add up quick — $1.50 per fillup of a 15-gallon tank for every 10-cent drop.

When 2017 began, analysts said gasoline might approach $3 a gallon by Memorial Day, but that prediction was off. Instead, the number of gas stations in the USA selling fuel for less than $2 a gallon has nearly doubled since last week to 5,177, according to GasBuddy, a gas price tracking website.

“This is usually ripe territory for prices to be skyrocketing,” GasBuddy analyst Patrick DeHaan said, but “we may dip quite a bit in the next week or two. It’s a boon to motorists that are seeing a consistent decline for the last few weeks just ahead of Memorial Day weekend.”

As employment and the stock market hit records and consumers show a preference for SUVs and other gas-thirsty family vehicles, expect motorists to go full throttle into the travel season.

“My hunch is it’s still going to be awfully congested in the summer. We’re still going to use a lot of gas,” Oil Price Information Service analyst Tom Kloza said.

Oil prices have fallen more than 13% over the past month. After dropping below $46 a barrel in midday trading Monday, the

U.S. benchmark crude rose to close at $46.43, up 21 cents for the day. In 2011, prices topped $100 a barrel.

“There’s a part of me that says, ‘Geez, every investment bank can’t be wrong,’ ” Kloza said, but anyone projecting oil above $70 this year is “delusional.”

DeHaan said gas prices haven’t caught up to oil’s recent decline, which points toward gas prices falling.

Behind the trend: U.S. shale oil producers have gotten more efficient and lowered the price at which they can turn a profit, about $50 a barrel on average, Goldman Sachs analyst Brian Singer said in a research note.

Those oil companies have increased production after the Organization of the Petroleum Exporting Countries (OPEC), led by its largest member, Saudi Arabia, reached a deal in November to lower its output.

OPEC members are likely to authorize an extension of at least three months on those production cuts when members meet this month, according to Capital Economics.

OPEC’s initial cut was meant to stabilize or boost prices, and it worked for a few weeks.

Saudi Arabia could bail on the production cuts if it concludes it’s losing too much market share to American producers.

“I wonder how long the Saudis are going to go before they throw in the towel and say, ‘Hey, enough of this,’ ” DeHaan said.

One wild card is President Trump’s upcoming trip to Saudi Arabia, the outcome of which could influence traders’ perception on Saudi Arabia’s plans for oil production.

Kloza said Trump’s interest in bolstering American energy producers will probably guide his strategy.