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Dec. 29 (UPI) — Retail gasoline prices in the United States are at the lowest they’ve been since mid-2021, following broader trends in commodities, but at least one analysts suggests the relief might not last.
Travel club AAA reported a national average retail price of $3.16 for a gallon of regular unleaded gasoline. That’s a touch higher than yesterday, but still a good 40 cents per gallon less than this time last month.
Retail gasoline prices in the United States peaked at around $5 per gallon in June, but a confluence of factors — from improved gas mileage to a decline in commodity prices triggered by fears of a recession — created headwinds for retail gasoline prices ever since.
AAA put year-ago gas prices at $3.28 per gallon. Federal data, meanwhile, show the last time the national average price was in the $3.15 range was in July 2021.
Before the long Christmas weekend, AAA said it was expecting a lower-for-longer outlook for retail gasoline.
“Increasing supply and low gasoline demand are pushing pump prices lower,” it stated. “As demand remains low and stocks rise, drivers will likely continue to see pump prices decrease through next year.”
Federal data show that U.S. gasoline stockpiles have increased by 20 million barrels since early November, bringing the level to around 2.5% below the five-year average. That’s down from the pre-November deficit to the five-year average of around 6%, though analysis from S&P Global Commodity Insights suggests inventories declined by 750,000 barrels over the last week.
That would normally indicate an increase in demand, though S&P estimates around 3 million barrels per day of refining capacity was shut-in due to the cold weather that hit much of the continental United States last week. That could in part explain the slight draw on gasoline inventories and the slight uptick in gasoline prices so far this week.
That said, the reduction in refinery activity is expected to be short-lived given the brevity of the cold snap in the refinery-rich southern United States. The temperature dipped below freezing in Houston last week, though the forecast for Thursday is for rain showers and a high of 77 degrees.
Looking ahead, Patrick DeHaan, the senior petroleum analyst at price-watcher GasBuddy, is changing his tune somewhat. For much of December, he was forecasting a Christmas Day average of around $3 per gallon, but now sees $4 per gallon in the cards for next year.
“It could be expensive,” he said. “The national average could breach $4 per gallon as early as May — and that’s something that could last through much of the summer driving season.”
That would still, however, be a dollar less than the peak levels from this year. Federal estimates put the national average price at around $3.50 per gallon for next year, down about 50 cents from this year’s average, but 50 cents higher than the $3 per gallon average for 2021.
