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WASHINGTON, D.C. — Consumers could be flooding the streets and highways this summer as gas price are expected to be more than $1 cheaper per gallon compared to last year.
According to the U.S. Energy Information Administration’s (EIA) Short-Term Energy and Summer Fuels Outlook, U.S. drivers are expected to pay an average of $2.45 per gallon this summer, $1.14 per gallon cheaper than the $3.59 average per gallon during the summer of 2014.
Lower gas prices this year are mostly based upon lower crude oil prices, reported the EIA. This summer, the Brent crude oil spot price is projected to average $58/barrel, which translates to $1.38/gal for the crude oil portion of the gasoline price. This oil price is down from a summer 2014 average of $106/barrel ($2.52/gallon for the crude oil portion).
Taxes, retail distribution margins and wholesale distribution margins make up the remainder of the gasoline price at the pump. Taxes and retail margins will be generally stable this summer, the EIA concluded, with wholesale margins much more variable.
“EIA projects wholesale margins during summer 2015 will be similar to both last year's level and the previous five-summer average,” the organization stated in its report. “However, EIA forecasts wholesale margins will decline through the summer, offsetting the effect of modestly rising crude oil prices, and contributing to a slight decline in retail prices from $2.50/gallon in April and May to an average of $2.43 in September.”
For all of 2015, the EIA projects the average price per gallon will be $2.40 nationwide. If achieved, the average U.S. household would spend $700 less on gasoline for the year compared to 2014, with annual motor fuel expenditures on track to fall to their lowest levels in 11 years.
As always, unknown factors can disrupt gasoline prices. A major geopolitical incident, a refinery outage or a decision by OPEC to dramatically reduce oil production would all cause gasoline prices to likely rise more than expected.