Gas prices: Where they're headed this year
Gasoline price declines could soon be coming to an end in the coming months thanks to seasonal trends.
On Wednesday the average gallon of gasoline was sitting at $3.09, down $0.15 from a month ago, according to AAA data.
Across the US, at least 28 states saw their average dip below $3 per gallon as of Wednesday, compared to just 11 states in mid-November.
Yet prices are expected to tick higher as the driving season kicks in. A more expensive summer blend and and extreme heat or hurricanes may also impact prices.
“When the dust settles at year’s end, OPIS sees an average annual price of $3.499 per gallon, amounting to the fifth most expensive year ever,” OPIS global head of energy analysis Tom Kloza told Yahoo Finance this week.
"Most sub-$3 per gallon values will disappear in the year’s first 100 days," though they’ll reappear in the fourth quarter as winter grade and lower demand seasonality kicks back in, added Kloza.
As the presidential election looms ahead, analysts expect the Biden administration to keep up its focus on lowering driving fuel costs.
"The White House, whether you want to criticize them or not, they're laser focused on gasoline prices," said Kloza. "I think they're going to be laser focused on gasoline prices in battleground states, places like Arizona, maybe Colorado, Nevada."
“The problem is you're going to see higher prices this year: Arizona, California, and the Pacific Northwest, and maybe a few Rocky Mountain states. So it's going to be a problem all year."
"This is a pocketbook issue affecting American’s perception of the economy and inflation,” Andy Lipow of Lipow Oil Associates said in a 2024 oil outlook note.
Lipow predicts gasoline will average less than $3.50 per gallon in 2024, peaking at $3.75 in late summer around the hurricane season.
"If you are in California, gasoline prices will be about $1.50 higher than the national average," he said.
The Golden State's average was at $4.71 per gallon on Wednesday, down $0.10 from one month ago, but still higher than $4.43 exactly a year ago. Californians pay the most for their driving fuel due to a lack of refining infrastructure, higher taxes, and regulations.
The Energy Information Administration forecasts retail gasoline prices will average $3.36 per gallon in 2024, down from its previous projection of $3.61.
The agency expects gasoline consumption to decline by 1% this year, as Americans continue to work remotely, fuel efficiency improves, and inflation keeps a lid on consumer spending.
Driving fuel prices ended 2023 near the lows of the year. Retail gasoline last year averaged $0.43 per gallon less than in 2022, according to EIA data.
Much of the price difference year-over-year had to do with declining oil prices, which slid an average of 10% in 2023.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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