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A person pumps gas at a Shell gas station on August 3, 2023 in Austin, Texas. Gas stations across the country have increased prices by an average of 26 cents per gallon over the past month as erratic temperatures have made fuel production more difficult due to the slowdown in cooling processes needed to refine crude oil.
New York CNN –
Gas prices will fall for the second year in a row in 2024, according to GasBuddy forecasts shared exclusively with CNN.
GasBuddy, whose 2023 forecast proved eerily accurate, expects U.S. gas prices to average $3.38 per gallon in the key election year of 2024.
That would represent a significant improvement from the $3.51 per gallon average in 2023 and an even larger decrease from the $3.95 average in 2022. Gas prices rose to record highs this year as Russia's invasion of Ukraine sent shockwaves around the world.
Even as the war between Russia and Ukraine continues and there is a risk that the war between Israel and Hamas will escalate into a regional conflict, GasBuddy expects drivers to see more relief in 2024. GasBuddy projects that Americans will spend about $32 billion less on fuel in 2023 and $79 billion less than in 2022.
“Next year is likely to be another march toward what most Americans would consider normal prices at the pump,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a telephone interview with CNN.
The forecast bodes well for consumers, who remain highly sensitive to fluctuations in the cost of living, particularly at the pump. It also offers a reason for cautious optimism for a White House that is fighting an uphill battle trying to sell its economic message to a skeptical public.
Cheaper gas prices would give the Federal Reserve even more room to maneuver as it tries to engineer a rare soft landing for the U.S. economy by taming inflation without triggering a recession. The price of gas is closely watched by the Fed but is not included in its “core” inflation measure.
“Gasoline prices may still be a little elevated, but when you consider wage growth, Americans don't have to work as hard to pay for that gallon of gas,” De Haan said.
GasBuddy projects that gas prices will not average $4 a gallon in any single month next year. The monthly national average is expected to peak at $3.67 in May and decline to $2.99 by December 2024.
In the face of a difficult Given the geopolitical situation, GasBuddy is optimistic about the price outlook for 2024 for one important reason: America is an energy powerhouse.
According to S&P Global Insights, the United States is on track to pump more oil than any other country in history.
Blockbuster oil production in the US is worrying climate scientists and undermining the argument that President Joe Biden has waged a war on US energy. It also offers consumers protection from a dangerous world that appears to be just one headline away from rising gasoline prices.
“The fact that the US is producing record amounts of crude oil leads to lower risk,” De Haan said.
Oil prices rose briefly earlier this month after BP suspended oil shipments through the Red Sea due to a series of attacks on ships by Houthi fighters from Yemen.
Although oil prices calmed down quickly, the damage was done to consumers. According to AAA, the national average price for regular gas has risen to about $3.13 per gallon. This is an increase from the recent low of $3.07.
In December 2022, GasBuddy predicted that gas prices would average $3.49 per gallon in 2023. That forecast was almost spot on, as actual gas prices have averaged $3.51 per gallon so far this year.
Of course, like any prediction, this call for lower gas prices in 2024 could prove wrong in either direction.
For example, a sudden slowdown in the U.S. economy could weaken demand and cause gasoline prices to fall, but at the expense of job losses.
Alternatively, there could be an escalation of the conflict in the Middle East threaten the energy supply and Oil prices rise back to $100 a barrel, driving up gasoline prices.
GasBuddy's De Haan said a big issue that keeps him sleeping at night is America's limited refining capacity.
Extreme weather events, including heat waves, have temporarily shut down aging refineries and limited gasoline supplies. This is a particularly big problem on the West Coast, where just one refinery failure is enough to drive up prices.
Another weather-related risk, as always, is the threat of a major hurricane targeting Gulf Coast refineries.
“You never know when a (Hurricane) Katrina or Harvey will come and cause tremendous damage to the low-lying Gulf Coast,” De Haan said.
Another big question mark is what OPEC+, the producer alliance led by Russia and Saudi Arabia, will do next.
The White House has had a difficult relationship with Saudi Arabia and relations with Russia remain very strained. OPEC+ has not shied away from withholding supplies to drive down oil prices at the expense of consumers around the world.
“The deteriorating relationship between leading oil producers and the US is a wild card,” De Haan said.