Years of above-average prices at the pump are projected to ease next year, saving U.S. drivers tens of billions of dollars.
Energy analysts predict the annual average price of regular gasoline will be under $3.40 per gallon for 2024, down from 2023’s anticipated average of $3.53 per gallon.
The drop — albeit small — is thanks to less global volatility from the pandemic and Russia, increased domestic oil production and refining capacity, and cooling inflation. Americans will likely save $32 billion on gasoline, according to the fuel price monitoring app GasBuddy.
The U.S. Energy Information Administration predicts a 2024 yearly national average of $3.36 per gallon of regular gasoline compared to GasBuddy’s estimate of $3.38. The EIA foresees $3.95 per gallon for diesel while GasBuddy says $3.87, both down from this year’s $4.22 average.
GasBuddy forecasts the lowest prices will come in January at around $3.11 per gallon and the highest in May near Memorial Day at nearly $3.70. Average yearly household spending on fuel is projected to be around $2,400, down 2% from 2023 but over 12% from 2022.
The national average for regular gasoline was $3.12 per gallon on Thursday, according to AAA, which was one cent lower than a year ago.
The news is no doubt welcome to the White House and President Biden’s reelection campaign after years of getting pummeled by Republicans and voters over high costs, which led Mr. Biden to drain the nation’s oil stockpile to its lowest level since 1983 to try to blunt prices.
But presidents have little impact on the volatile energy industry that hinges on the ebbs and flows of supply and demand.
“I’m sure there will be a lot of finger-pointing or credit-taking for what’s determined not by politicians, but by the fundamentals of economics: supply and demand,” said GasBuddy’s head of petroleum analysis Patrick De Haan. “The farce of ‘energy independence’ will likely continue, and I’m sure false information on the nation’s [Strategic Petroleum Reserve] being empty will multiply.”
Domestic oil production set records this year and is expected to do so again next year. The EIA forecasts the average daily output will increase by roughly 200,000 barrels from 12.9 million barrels in 2023 to 13.1 million in 2024. The agency projected the 2024 average for WTI Crude, the U.S. oil market benchmark, will increase nominally by roughly 50 cents per barrel to around $78.
“The truth is, the U.S. is producing record amounts of crude oil, and the SPR stands half full and is rising,” Mr. De Haan said. “Oil companies continue to raise output, not politicians.”
Potential inflationary factors for gas prices include the yearly hurricane season, recent attacks in the Red Sea by Houthi militants and the length of OPEC+ production cuts, namely from Russia and Saudi Arabia.
The rise of electric vehicles could dampen fuel demand, but the industry has faced declining sales amid concerns about affordability and charging capabilities.