AAA Forecasts Summer National Gas Price Average to Drop to $2.70

07 June 2019

    Are Americans Numbing To The Pain At The Pump?
 

NEWS RELEASE

CONTACT:

Montrae Waiters, AAA spokeswoman, The Auto Club Group,
office (813) 289-5859, cell (813) 244-0815 
MWaiters@AAASouth.com

 

ARE AMERICANS NUMBING TO THE PAIN AT THE PUMP?

AAA Forecasts Summer National Gas Price Average to Drop to $2.70

 

 

ATLANTA, Ga. (June 7, 2019) — When it comes to filling-up at the pump, Georgia motorists are now paying an average price of $2.54 per gallon. That price is 23 cents less than the current national average which is $2.77.

AAA’s 2019 Gas Price survey found that 50 percent of consumers think paying $3/gallon is too high – an increase of 30-cents from last year when half of consumers reported $2.70 as too expensive. 2019’s price point is also 50 cents more than in 2016, when half of consumers thought $2.50 was too much to pay at the pump. With gas price sensitivity lowering over the past three years, Americans are feeling numb to the pain at the pump.

Summer Forecast

AAA forecasts U.S. gas prices will average $2.70 per gallon this summer. If that price holds, it would be the cheapest summer at the pump in two years. 

During previous summer driving seasons (Memorial Day - Labor Day), Georgia gas prices averaged $2.83/g in 2018, $2.23/g in 2017, and $2.27 in 2016.

“There is good news for motorists this summer - the highest prices of the year could be in the rearview mirror,” said Montrae Waiters, spokeswoman, AAA- The Auto Club Group. “With most refineries operating at normal levels, demand at robust rates, and cheaper crude oil prices, summer gas prices are poised to be a little less than last year –dropping as much as a dime to lower the national average to $2.70.”

Even with Americans being more tolerant of higher gas prices, you can still expect 74% of Americans to make lifestyle changes to offset increased pump prices. Of those, nearly a quarter (24 percent) say $2.75/g would motivate them to make the following changes: 

  1. Combine errands or trips - 65% (down from 79% in 2018)
  2. Drive less – 60% (down from 73% in 2018)
  3. Reduce shopping or dining out – 49% (down from 61% in 2018)
  4. Delay major purchases – 43% (down from 50% in 2018)
  5. Drive a more fuel efficient vehicle – 35% (down from 46% in 2018)

Crude + Demand Factors

The 2019 summer driving season began with crude oil prices that are much more favorable for drivers than last year.

  • 2019 - After reaching a 2019 high of $66 per barrel in April, the price of West Texas Intermediate (WTI) crude, which AAA tracks to understand impact on pump prices recently dropped to just below $52 per barrel. 

  • 2018 - The price of WTI ranged from $64 to $68 per barrel in the first few weeks of June. Eventually crude prices rose to $74 per barrel in July, which dragged Florida gas prices up to $2.80 per gallon. 

The price of crude is a driving factor when it comes to retail gasoline prices, accounting for nearly 60% of the price motorists see at the pump year-round. While crude prices have been cheaper this year, AAA is monitoring a number of circumstances that could cause crude oil market prices to increase. This includes reductions in global and domestic crude supply, exports, and U.S. gasoline demand - all of which could be heavily influenced by an active hurricane season. 

Crude Analysis

The International Energy Agency noted in its May 2019 Oil Markets Report that global crude supply decreased as a result of reduced exports from Canada, Iran and other major crude exporters. If the Organization of the Petroleum Exporting Countries (OPEC) and its partners, including Russia, decide to extend their current production reduction agreement of 1.2 million barrels per day through the end of 2019, that would further tighten the global crude market. OPEC extending its agreement will also likely lead to increased crude prices that would lead to higher gas prices. It could also entice U.S. crude producers to export more crude, which could tighten supplies in the U.S. and raise retail prices at home. OPEC and its partners will meet on June 25 and 26 in Vienna, where they are expected to announce if the agreement will remain in effect.

Demand Forecast

For domestic gasoline demand, summer 2019 has been forecasted to reach some of the highest levels on record in the U.S. Meanwhile, domestic gasoline stocks are at their lowest level going into June since 2016. If demand rises while gasoline stocks remain low, pump prices could see modest increases, especially if supply is tight in local markets. On the other hand, gas demand could fall, as we’ve seen in recent weeks due to inclement weather from the Rockies to the Midwest and South. Moreover, the added threat of a major hurricane making landfall could also impact demand, which could suppress pump prices.

Summary

As Americans settle into summer, many outliers could pave the way for unexpected price bumps, so stayed tuned. Motorists can always find the latest national and state gas price averages and trends at GasPrices.AAA.comGeorgia gas prices can be found here. Weekly gas price analysis can be found at the new AAA Georgia Newsroom

 

About The Auto Club Group
The Auto Club Group (ACG) is the second largest AAA club in North America. ACG and its affiliates provide membership, insurance, financial services and travel offerings to over 9.9 million members across eleven states and two U.S. territories including Florida, Georgia, Iowa, Michigan, Nebraska, North Dakota, Tennessee, Wisconsin, Puerto Rico and the U.S. Virgin Islands; most of Illinois and Minnesota; and a portion of Indiana. ACG belongs to the national AAA federation with more than 59 million members in the United States and Canada and whose mission includes protecting and advancing freedom of mobility and improving traffic safety. Motorists can map a route, identify gas prices, find discounts, book a hotel, and access AAA roadside assistance with the AAA Mobile app for iPhone, iPad and Android. Learn more at AAA.com/mobile. Visit AAA on the Internet at AAA.com.