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04/19/2022

Summer Fuel Prices Expected to Be Highest Since 2014

Greater demand will contribute to higher crude oil prices, according to the U.S. Energy Information Administration.
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driving in the summer

NATIONAL REPORT — During the summer driving season — defined as April through September — the average price for a gallon of gasoline is expected to be $3.84, the highest price seen since 2014 when adjusting for inflation, according to the U.S. Energy Information Administration's (EIA) "Summer Fuels Outlook." In 2021, summer fuel prices averaged $3.06 per gallon.

The EIA expects higher fuel prices this summer as a result of higher crude oil prices. Crude oil prices have generally risen since the start of the year, partly as a result of geopolitical developments, particularly Russia's war against Ukraine.

"We expect U.S. economic activity to increase through the summer, resulting in more demand for petroleum fuels. Greater demand will contribute to higher crude oil prices. We expect Brent crude oil will average $106 per barrel this summer, which would be $35 per barrel higher than last summer," wrote the EIA.

The organization did note, however, that its forecast could change. Increased volatility of crude oil prices, which account for around 60 percent of total retail gasoline prices depending on several factors, remain highly uncertain. Notably, the EIA's outlook takes into account all sanctions on Russia announced as of April 7, but the range of possible outcomes for resulting oil production in Russia is wide.

Peak Price Reached?

Although motorists are unlikely to enjoy the highest gas prices they have seen in eight years adjusted for inflation, the EIA did report some good news.

"Gasoline and diesel prices have already declined since their peaks in March, when the U.S. average gasoline price surpassed $4 per gallon and the average diesel price surpassed $5 per gallon," stated the EIA. "We expect these prices to continue falling throughout the summer."

As U.S. refineries increase gasoline and distillate production, the EIA expects increased production to gradually place downward pressure on wholesale gasoline margins and retail prices during the summer.

"As a result, we forecast the average U.S. retail gasoline price will fall to $3.75 per gallon in July and to $3.68 per gallon in September," wrote the EIA. "Similarly, we expect the average U.S. retail diesel price to fall to $4.44 per gallon in July and $4.20 per gallon in September."

Zeroing in on today, as more areas in the United States see pump prices fall below $4 a gallon, demand is ticking back up. Domestically, the national average for a gallon of gas fell to $4.08 on April 18, stated AAA.

"As the days get longer, the weather gets warmer, and pump prices dip from their record highs, consumers feel more confident about hitting the road," said Andrew Gross, AAA spokesperson. "But these lower pump prices could be temporary if the global price of oil increases due to constrained supply."

Today's national average for a gallon of gas of $4.08 is 19 cents less than a month ago and $1.21 more than a year ago.

The nation's top 10 largest decreases in gas prices during the past week occurred in Ohio (−7 cents), Delaware (−7 cents), Florida (−6 cents), Indiana (−6 cents), California (−5 cents), Georgia (−5 cents), Pennsylvania (−5 cents), Kentucky (−4 cents), Virginia (−4 cents) and West Virginia (−4 cents).

The nation's top 10 least expensive markets are Kansas ($3.66 per gallon), Missouri ($3.66), Arkansas ($3.69), Georgia ($3.70), Oklahoma ($3.71), Texas ($3.71), South Carolina ($3.74), Mississippi ($3.77), Ohio ($3.77) and Iowa ($3.78).