Analysts: Gas Prices to Drop to Lowest in 6 Years This Summer
Los Angeles — An ongoing glut of crude oil will give U.S. drivers this summer the lowest seasonal gasoline prices in six years, the government predicts.
Even in California — where prices recently surged a dollar above the national average, sparking accusations of collusion by oil refineries — analysts expect gasoline to be the cheapest it’s been in years.
Barring a natural disaster or other major supply disruptions, prices in the state will continue to fall, said analyst Allison Mac of the fuel-tracking firm GasBuddy.
“We may have already peaked in Los Angeles,” she said. “We’re on pace to have one of the lowest-priced summer driving seasons in a while.”
Nationally, between April and September — historically, the busiest driving season — gasoline will cost an average of $2.45 for a regular gallon at retail, according to a Tuesday forecast from the U.S. Energy Department.
The price, the lowest since 2009, is nearly a third less than the $3.59-a-gallon price during the same period a year earlier, according to the agency’s Energy Information Administration.
Travelers buoyed by a strengthening employment market and improving incomes will use 1.6 percent more gasoline this summer, according to the agency.
But their fuel spending will be the lowest since 2004.
In large part, the decline reflects a supply that overwhelms demand. Last year, the U.S. was the top producer of petroleum in the world.
The surplus will cause the price of benchmark Brent crude oil to plunge 46 percent this summer to an average of $58 a barrel from $107 a barrel last summer, the energy agency predicts.
In 2016, prices are expected to rise but only moderately.
Gasoline prices nationwide slumped for months after oil prices tanked last summer. They climbed slowly earlier this year and then reversed course last month.
On Tuesday, an average gallon of regular gasoline cost $2.38 nationwide, down almost 8 cents from a month earlier and $1.20 less than the same day a year ago, according to GasBuddy.
If current negotiations result in oil-related sanctions against Iran being lifted, the government believes that prices could fall even further. Iran has at least 30 million barrels in storage and can quickly ramp up production, according to the energy agency.
Increased imports and domestic refinery production could also boost supply.