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WASHINGTON, D.C. — Summer gas prices in 2017 are expected to trump 2016 averages, with drivers paying an average of $2.46 per gallon of regular gas, according to forecasts in the Energy Information Administration (EIA)’s Short-Term Energy Outlook (STEO).
Gasoline prices from April through September are expected to be 23 cents per gallon higher than the average price last summer. However, this price is still nearly 70 cents per gallon below the previous five-year average, STEO found. The gasoline price increase this summer reflects slightly higher forecast crude oil prices.
EIA forecasts that regular gasoline prices will average $2.39 per gallon for the entire year of 2017. On average, the administration found that the average household will spend about $200 more on gasoline in 2017 than in 2016, when gasoline prices were the lowest since 2004.
Gas prices in 2017 reflect crude oil prices, wholesale margins, retail distribution costs and taxes. With the latter two generally more stable, changes in gas prices are primarily the result of changes in crude oil prices and wholesale margins, according to EIA. Each dollar per barrel of sustained price change in crude oil or gas wholesale margins translates into a change of 2.4 cents per gallon in prices.
Seasonality also affects gas prices. During the spring and summer, gas demand often increases and gas specifications change from winter-grade to spring- and summer-grade. Summer-grade gas is more costly to manufacture, so wholesale gas margins typically increase during the summer months.
This summer, motor gas consumption is expected to average 9.5 million barrels per day, slightly more than last summer (0.3 percent). An increase in summer highway travel will also offset an increase in fleet-wide fuel efficiency (1.4 percent vs. 1.2 percent, respectively).
From coast to coast, changes in gas prices will be significant, according to STEO. For example, average summer prices range from a low of $2.21 per gallon on the Gulf Coast to $2.87 per gallon on the West Coast. Prices on the West Coast are often the highest in the country because California requires a blend of gasoline that is relatively costly to produce and some states in the region have relatively high state gasoline tax rates.
On the other side of the country, gas prices in the Gulf Coast are often among the lowest in the country because of relatively low state tax rates and abundant gas supplies, as the region is home to about half of U.S. petroleum refining capacity.
Headquartered in Washington, D.C., the U.S. Energy Information Administration collects, analyzes and disseminates independent and impartial energy information to promote efficient policymaking and markets, while educating the public on energy and its interaction with the economy and the environment.