More than leaves will be falling as the temps cool off over the coming months. So, too, will gas prices according to the American Automobile Association. Its researchers forecast
that the national average price of gasoline will drop to $2.40 or lower this fall. That adds up to a potential savings of .25 cents a gallon, compared to summer prices.
Falling Gas Prices
Prices are already on their way down. As of August 22, the national gas price average was 15-cents cheaper than it had been five weeks prior. According to AAA
, at $2.59, the national gas price average is poised to be potentially the cheapest Labor Day weekend average in three years. Any small spikes leading up the holiday are expected to be short-lived. AAA predicts prices will continue their overall downward trend to get to that aforementioned $2.40 number for three reasons: less expensive crude oil prices, the drop-off in gasoline demand after Labor Day and the move to winter-blend gasoline.
“AAA predicts that fall gasoline prices will be significantly less expensive than this summer with motorists finding savings in every market across the country,” said Jeanette Casselano, AAA spokesperson. “Many factors are driving this decrease, but the low price of crude oil is chief among them.”
Crude Oil Prices
Crude oil prices are forecasted to range between $50 and $60 per barrel this fall, according to AAA. That is a considerable drop from last fall when prices ranged between $60 and $75. Why so cheap? AAA experts say current total domestic crude inventories sit at 438.9 million bbl, which is 31.5 million bbl higher than last year at this time. The continued glut of oil encouraged the Organization of the Petroleum Exporting Countries (OPEC) and its partners to extend their 1.2 million b/d production reduction agreement through the end of the year. However, so far, reduced supply from OPEC and its partners has not led to a sustained higher price for crude.
Keep in mind, that extreme weather events, like hurricanes, can always impact gas prices. The National Oceanic and Atmospheric Administration predicts an above normal, active 2019 season with 10 to 17 named storms here in the U.S. Five to nine of those are predicted to turn into hurricanes. A hurricane that makes landfall could cause declining gas prices to shoot back up. Even the threat of a hurricane making landfall can shutter domestic crude production, leading to spikes in crude and gasoline prices. In 2017, Hurricane Harvey caused the national gas price average to jump 30-cents in a matter of days.
Fall Regional Outlooks
- West Coast: This region is consistently home to the most expensive markets in the country, even though the crude refinery utilization rate in the region has grown to nearly 97 percent this summer. Growing stocks have helped to push prices lower across the region. Gas is $3.01 or more in all seven states in the region except Arizona. As fall brings lower demand for gasoline, AAA expects the West Coast to see gas prices drop, in light of higher stock levels, during the months ahead.
- Great Lakes and Central States: Gasoline stocks and regional refinery utilization have seen mostly weekly increases, with the exception of a few, throughout the summer. Moving into the fall, refinery utilization will likely slow as demand hits a post-summer slump and refineries make the switch to winter-blend gasoline production and undergo planned maintenance. Prices should push cheaper, but that won’t stop the typically volatile region from being susceptible to sudden price shocks.
- Mid-Atlantic and Northeast: Total gas stocks in the region sit at 61 million bbl, which is 3 million bbl less than last year at this time. Part of the year-over-year deficit stems from the pending closure of Philadelphia Energy Solutions (PES), the largest refinery on the East Coast. This would usually lead to a spike in gas prices. However, gasoline imports are easing supply concerns and keeping retail gasoline prices moving lower. Though any further supply disruptions could cause prices in the region to spike temporarily.
- South and Southeast: This summer, the region has averaged a gasoline stock level of nearly 84 million bbl, with healthy regional refinery utilization rates, which have helped keep gas prices low. Motorists in the South and Southeast can expect to find savings at the pump this fall, potentially even under $2/gallon by year-end, barring any major hurricanes.
- Rockies: Typically gas prices skew their highest for the Rockies region during summer tourism season. That was no different this year. However, prices were significantly cheaper than summer 2018 – Utah and Idaho’s averages priced under $3/gallon for all of July, compared to a high of $3.22 in 2018. As the tourist season winds down and demand slows, gas prices may see some fluctuation, but overall, motorists can expect prices to remain steady as gasoline stocks sit at their highest level – 7.5 million bbl – recorded by the EIA for the month of August.