How high will gas prices go in 2018?
Experts say consumers are likely to pay more for gasoline in the upcoming year, but market forces are in place moderating those increases and make it unlikely there will be a repeat of huge spikes at the pump like those that punished consumers in 2014.
“I would be shocked if we saw greatly increased prices in gasoline in 2018,” said Skylar McKinley, spokesman for AAA Colorado in Denver. “We’re in a very good place for gas right now.”
On Wednesday, GasBuddy, a provider of crowd-sourced information to help people find the cheapest gas prices, predicts the average price of gasoline for the year will rise 19 cents. In 2017, the average prices was $2.57 per gallon, the highest average price since 2014, according to GasBuddy’s 2018 Fuel Price Outlook.
While several variables affect the price of gasoline, Patrick DeHaan, head of petroleum analysis at GasBuddy, said OPEC cuts in oil production have led oil inventories to begin 2018 about 50 million barrels lower than a year go.
However, McKinley said a major factor that should moderate gasoline prices this year is increased fracking activity in North American oilfields. McKinley said once oil costs are about $55 a barrel, North American producers began returning dormant fracked wells into production, and the increase in fracked oil eases price increases caused by OPEC cuts. The amount coming from fracked oil can even lower the price of crude oil, which eventually translates to lower gasoline prices.
Timing has a lot to do with it also.
“Gas prices always increase during the holidays, and we’re experiencing a stronger economy, and people are more inclined to travel. But I think during the next month, as you move away from the holidays, you’ll begin to see gasoline prices going down,” he said.
Gas prices for January are still about 50 cents per gallon cheaper than their peak January price hit in 2014, Skylar said.
According to GasBuddy, the nation’s yearly gasoline bill will rise to $364.6 billion dollars, some $25 billion higher than what drivers spent last year as the average household sees its yearly gasoline bill rise to $1,898, up from $1,765 in 2017. Compared with 2016, drivers will shell out $62 billion more during the year.
GasBuddy’s forecast does not expect record-breaking prices this year, and most of the country will see prices peak under $3 per gallon. But unexpected disruptions could push the national average close to $3.
DeHaan noted that several factors including the strength of the economy, fuel taxes, weather and global conflicts all play roles in setting the final gas price consumers see at the pump.
“While gasoline prices overall remain affordable, one aspect that continues to worsen is the gap between what stations are charging. It’s become nothing short of crazy how one station might sell gasoline 20 to 40 cents lower or higher than a nearby competitor,” DeHaan stated in a news release.
According to AAA, the average gas price on Tuesday in Durango for regular unleaded was $2.46, in Denver it was $2.34, and the Colorado average was $2.41. The highest price in Colorado on Tuesday as reported by AAA was $2.93 in Vail.
McKinley said prices from Tuesday are pretty typical of supply chain differences and differences in populated markets versus rural markets. In general, he said Durango consumers can expect to pay between 10 cents to 20 cents more per gallon than the price in Denver.