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GasBuddy: Another year of low gas prices

Lower-for-longer forecast for crude oil prices spells savings for consumers, market review finds.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Jan. 7, 2016 at 7:55 AM
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CHICAGO, Jan. 7 (UPI) -- The average price for a gallon of gasoline in the United States is expected to drop in 2016 for the fourth straight year of declines, a market forecast finds.

The retail price for a gallon of regular unleaded gasoline has been relatively stable at around $2 for the better part of a month. A combination of low demand during the winter and lower crude oil prices means $3 per gallon gas is increasingly rare, except in states with high tax rates.

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Retail price watchdog group GasBuddy said it expects consumers will spend about $325 billion on gasoline this year, around $17 billion less than they spent last year.

Patrick DeHaan, a senior analyst with the group, said predicting price trajectories can sometimes be more of an art than a science, but trends over the year offer a decent clue as to where gasoline prices should head for 2016.

"We believe the global glut of oil and record level for U.S. crude oil inventory will maintain considerable pressure on benchmark crude prices," he said in a statement. "Coupled with tepid demand from the world's largest economies, that suggests the overall trend of recent years should continue, and that means favorable outcomes for U.S. consumers."

Refiners by late spring start gearing up to mix a summer blend of gasoline, which requires more processing steps to control vapors during warmer months. That switch should push retail gasoline prices close to around $2.70 on average by May. That could be the peak, as GasBuddy forecasts $3 gasoline this year "will be hard to find."

The U.S. Energy Information Administration in a mid-December report said it expected a full-year 2016 average price at the pump of $2.36 per gallon, lower than the expected 2015 average by about 3 percent.

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