NEW YORK (MainStreet) — Travelers who plan on driving to their holiday destinations during the next two weeks may not see much of a reprieve at the pump.
Experts predict that gasoline prices will remain close to where they are now or fall or increase slightly as more drivers are expected to hit the road.
The recent dips in gasoline prices in some parts of the U.S. are a welcome relief, but consumers should not plan on having the low prices stay at the pump since some of the declines only occurred in key regional areas such as the Gulf Coast and Midwest. Gasbuddy.com found that gas fell below $3 a gallon in Arkansas, Kansas, Missouri, Oklahoma, New Mexico and Texas. The average price in the U.S. was $3.21 a gallon with the lowest gas in Oklahoma at $2.87. Gasoline prices averaged $ 3.24 in 2012.
Gasoline prices have fallen the last couple of weeks but are likely to rise slightly headed into Christmas and the New Year, said Ryan Mossman, vice president and general manager of fuel services of Fuelquest, a Houston-based software company that manages supply chain for suppliers and purchasers of fuel.
The decision by the Federal Reserve to taper quantitative easing has been accompanied by rising prices in the wholesale markets, he said.
“Although reducing quantitative easing makes the dollar stronger and it should make oil and gasoline cheaper, the opposite has happened,” Mossman said. A stronger economy is likely to reflect stronger gasoline demand and higher prices, he said.
“This coupled with travel organizations like AAA predicting above average travel during the holidays in 2013 put the likelihood of a slight rise to around $3.27 a gallon,” Mossman said. “Areas such as the middle part of the country will see much lower prices than that.”
Overall, the weekly U.S. average gasoline retail price is now $3.24 per gallon, according to the Energy Information Administration. Crude oil makes up 71% of gasoline prices, taxes contribute 13% and vary by state and the remaining 16% comes from refining, distribution and marketing costs.
Gasoline prices fell by more than 40 cents from the beginning of September through the middle of November. The U.S. weekly gasoline retail price rose by 8 cents per gallon to reach $3.27 per gallon on December 2 because of unplanned refinery maintenance and higher crude oil prices, the EIA said. Last year the annual average regular gasoline retail price was $3.63 per gallon and is expected to average $3.50 per gallon in 2013; predications have it that cost will drop to $3.43 per gallon in 2014.
“I expect holiday gasoline prices to remain about where they are or slightly higher,” said Brian Youngberg, a senior energy analyst at Edward Jones in St. Louis. “The Fed announcement has helped push oil prices up slightly and wholesale gasoline prices have followed suit.”
Prices are likely to decline next year, said Chris Faulkner, CEO of Breitling Energy Companies, a Dallas oil and gas exploration and production company.
“I predict cheaper gas prices are shaping up as an unexpected gift for drivers this Christmas and into the New Year,” he said. “Gas prices have climbed slightly from the multi-year low of $3.18 per gallon on November 12, but most drivers will still pay less than a year ago to fill up as the hit the holiday roads.”
Gas prices increased recently because of planned and unexpected maintenance at numerous refineries and the seasonally stronger demand for gasoline signaling that we could see more drivers on the road as compared to a year ago, Faulkner said. “I do predict that gas prices will decline by the end of the year due to rising supplies and increased refinery production capacity as refiners want to move product and not hold on to crude supplies going into the end of the year due to ad valorem tax reasons.”
Consumers should have a plan when they are planning longer trips, he said. “Planning out your fueling is an invaluable tactic,” Faulkner said. “You can research the prices on the web prior to leaving. Before you depart, spend some time researching fuel prices and plan your fuel stops in advance.” Driving from one state to another means you could be paying as much as $0.20 to $0.30 cents per gallon, he said. “It is well worth stopping to fill up your tank near a state line if you’re going to enter a state where fuel prices are higher,” Faulkner said.
Driving the speed limit will result in conserving fuel.
“Lay off the gas pedal and drive the speed limit,” he said. “While the holiday rush may have drivers rushing around town, slowing down to observe the speed limit will conserve fuel. The U.S. Department of Energy reports that each 5 mph driven over 60 mph is like paying an additional $0.25 per gallon for gas.”
He also recommends that drivers avoid placing luggage or other equipment on top of their cars. “Don’t look like Clark Griswold from ‘National Lampoon’s Vacation’ with all of your luggage strapped to the roof,” Faulkner said. “A loaded roof rack affects the vehicle aerodynamics and creates extra drag that reduces fuel economy in a major way.”
Consumers can easily find cheaper gas prices at big box stores such as Costco or Sam’s and large grocery store chains that offer reward points that can shave off several cents on each gallon, said David Zahn, vice president of marketing for FuelQuest.
It is relatively easy for consumers to shop around for prices by looking online or using mobile applications, said Zahn. One good resource is Gasbuddy.com, which utilizes crowdsourcing or users who provide real-time data on the cheapest gas prices.
Before you hit the road, make sure to take care of any engine problems—stalling, hard starting or rough idling, said Bret Bodas, vice president of the automotive group at RepairPal, provider of auto repair and maintenance information.
“Cold weather only makes engine problems worse, so be prepared,” he said. “It is also a good idea to replace dirty filters—e.g. PCV, air, fuel.”
Article Author: Ellen Chang