Motorists will be rewarded at the pump this year, spending $17 billion less compared to 2015 as the national yearly sags for a fourth straight year to $2.28 a gallon, according to GasBuddy’s 2016 Fuel Price Outlook.
Aside from a national average that’s forecast to be lower than 2015, highlights include:
$325 billion will be spent on gasoline in the U.S. in the year ahead, $17 billion less than last year. That’s considerable given that consumers saved $134 billion on gasoline in 2015 versus what was paid for gas in 2014.
The ‘winter-blend’ to ‘summer blend’ fuel transition mandated by EPA regulations will again deliver a consistent climb in retail gasoline prices this spring, but the ‘compression’ that has occurred since 2012 will likely yield a peak for 2016 that falls below the 2015 peak of $2.82.
Expect the national average to peak in May in the $2.70s. Most states will experience peak prices in April or May, while a minority will peak in June.
$3 a gallon gasoline will be hard to find, except for areas of the West Coast.
Diesel’s yearly average price will be lower than gasoline for the first time since 2004.
“Looking at the broad range of factors that impact crude oil, forecasting gasoline and market fundamentals are a delicate balance of art and science,” says Patrick DeHaan, head petroleum analyst for GasBuddy. “While past history is never a guaranteed indicator of future performance, it does offer clues that are instrumental to short-term and long-term forecasts.”
“For instance, we believe the global glut of oil and record level for U.S. crude oil inventory will maintain considerable pressure on benchmark crude prices. Coupled with tepid demand from the world’s largest economies, that suggest the overall trend of recent years should continue, and that means favorable outcomes for U.S. consumers,” DeHaan added.
Additional components that have the potential to weigh on retail gasoline prices include federal and/or state tax changes, Middle East volatility, currency fluctuations, refinery maintenance and/or unscheduled outages, weather events, and shipping / transportation snafus.
“While there are always some unforeseeable surprises, we’re confident that when we reach the end of the 2016, the roller coaster ride will net savings over fuel purchases of last year, especially for savvy motorists who shop for the cheapest gasoline prices,” said Gregg Laskoski, GasBuddy senior petroleum analyst.