3 reasons gas prices could fall this summer
With Memorial Day in the rear-view mirror, summer driving season is officially in session. And as of June 1, the national average price for a gallon of gasoline is at its highest level so far this year, at $2.75 per gallon.
AAA points to several reasons pump prices have been trending upwards lately. The global price of crude oil has been rising, and some local refinery issues in the Midwest and on the West Coast haven't helped.
But AAA is also predicting that U.S. gas prices should again be dropping soon, and it gives the following three reasons:
- Quoting U.S. Energy Information Administration figures, AAA say oil and gas supplies remain "abundant." The nation's commercial crude oil stocks are up around 22 percent compared to a year ago, while gasoline supplies are currently about 4 percent higher compared to this time in 2014.
- Gas prices have seasonal ups and downs. They often drop or remain static around this time of year, as U.S. refineries complete their scheduled seasonal maintenance and rev up production of summer gasoline blends. AAA notes that over the past five years, gas prices in June have fallen by an average of 12 cents per gallon. And given the plentiful supplies, that trend is likely to continue this year.
- After last year's historic drop in crude prices, America's oil production may be reaching a supply-and-demand balance where many producers can break even with prices at $50 to $60 per barrel. On the domestic front, AAA says oil prices many not rise significantly in the near future, "because any further increase in price could lead to a rise in production, which likely would return prices lower."
AAA also acknowledges several wild cards that could mess up these projections. More Mideast volatility and fighting could disrupt global oil supplies. OPEC might unexpectedly change its production quotas at the cartel's upcoming meeting. American refineries could have unforeseen problems. And June 1 also brings the Atlantic hurricane season, which could mean strong storms capable of disrupting U.S. production.
But it appears many Americans are hoping for a ready supply of relatively inexpensive gasoline this summer. AAA says about 60 percent of U.S. drivers are likely to take a road trip of 50 miles or more this year if gas remains close to its current level.