August 29, 2018|
AAA Predicts Favorable Fuel Prices for Fall
Among all 50 states, smallest year-over-year price variance reported in Nebraska and Iowa
OMAHA, NE, (August 29, 2018) – AAA forecasts the national average pump price will drop 14-cents to $2.70 or below this fall, saving motorists more than 25-cents per gallon compared to prices reported back in May when unleaded climbed to a yearly high of $2.97 a gallon. Currently, the national average is $2.835 a gallon for unleaded fuel.
“Labor Day signals the end of the summer travel season and the beginning of an autumn trend that normally leads to lower gas prices,” said Rose White, spokesperson for AAA-The Auto Club Group. “In September, gasoline demand drops and refiners switch to a cheaper-to-produce winter-blend fuel, putting downward pressure on prices at the pump. However, several factors can reverse this forecast including crude oil price hikes, geopolitical tensions, and the threat of a hurricane on oil operations.”
Gasoline prices for 2018 have been more expensive than 2017. AAA reports that the 2018 year-to-date national gas price average of $2.73 a gallon for unleaded fuel is 41-cents more than the 2017 year-to date average of $2.32 a gallon.
When comparing 2018 against 2017, Nebraska and Iowa report the smallest year-over-year variance in fuel prices among all 50 states. AAA’s summary shows Nebraska with the lowest price variance with fuel averaging 35 cents more than last year. Nebraska’s average was $2.30 a gallon in 2017, compared to $2.65 for 2018. Iowa reports the second lowest year-over-year price variance of 36 cents per gallon. Iowa’s average was $2.28 in 2017, compared to $2.64 for 2018.
Trends for Year-Over-Year State Averages:
What Will Push Pump Prices Down this fall?
- The top 10 states with the largest year-over-year difference in gas price averages are mostly West Coast, Northeast or Mid-Atlantic states: California (+57 cents), Hawaii (+54 cents), Indiana (+49 cents), Arizona (+48 cents), Oregon (+46 cents), Connecticut (+45 cents), Rhode Island (+45 cents), Utah (+45 cents) and Massachusetts (+44 cents).
- Four Central and one Southern state carry the smallest year-over-year difference in gas prices: South Dakota (+37 cents), Missouri (+37 cents), Louisiana (+36 cents), Iowa (+36 cents) and Nebraska (+35 cents).
Part of the anticipated drop in fall pump prices is due to the switchover to winter-blend gasoline in mid-September. The difference between summer- and winter-blend gasolines involves the Reid Vapor Pressure (RVP) of the fuel. RVP is a measure of how easily the fuel evaporates at a given temperature. The more volatile a gasoline (higher RVP), the easier it evaporates. Winter-blend fuel, which is cheaper to produce, has a higher RVP because the fuel must be able to evaporate at low temperatures for the engine to operate properly, especially when the engine is cold.
In addition, the arrival of fall historically means a drop in consumer gasoline demand as fewer Americans take extended road trips, compared to the summer.
What Could Prevent Cheaper Gas Prices from Coming to a Pump Near You?
- Crude Market Volatility: Much of 2018 has brought volatility to the domestic and global crude markets, as market watchers try to glean insight into forces that will shape global supply this fall. These forces include:
- Venezuela is a major crude producer for the Western Hemisphere, but its collapsing economy could halt its crude production.
- Organization of Petroleum Exporting Countries (OPEC) announced an increase in production over the summer, but slower-than-expected production growth could contribute to higher crude prices during the second half of the year.
- Geopolitical uncertainty in the Middle East and around the globe could disrupt vital crude flows.
- Iran Sanctions: When President Trump announced that the U.S. would withdraw from the Iran Nuclear Deal in May, the decision sent the crude markets into upheaval. In August, the first round of re-imposed sanctions on the country, which target Iran’s financial sector, went into effect and led to a brief uptick in crude prices. The next round of sanctions, currently scheduled to take effect in November, will target Iran’s energy sector – including its crude exports – and will likely have a more sustained impact on crude prices. If and when those sanctions take effect, crude prices will likely surge over an expected reduction in Iranian crude exports and increased tension in the region that could destabilize global crude flows.
- Updated Hurricane Forecast: The National Oceanic and Atmospheric Administration’s Climate Prediction Center predicts a total of 9–13 named storms (winds of 39 mph or greater of which 4-7 will become hurricanes) including up to two major hurricanes (winds of 111 mph or greater). An average six-month hurricane season produces 12 named storms, of which six becomes hurricanes, including three major hurricanes. The mere threat of a hurricane in the U.S. would cause pump prices to spike, likely regionally, due to constrained supply and delivery challenges.
AAA 2018 Gas Watcher’s Guide
In time for fall, AAA is releasing the 2018 Gas Watcher’s Guide with tips for conserving fuel, saving money and maintaining fuel efficiency. A downloadable version of the guide is available at Newsroom.AAA.com. The Guide offers these tips – and many more - for motorists to keep in mind as they fill-up at the pump:
Motorists can find current gas prices at GasPrices.AAA.com and along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.
- If your vehicle’s engine does not require premium or mid-grade fuel, don’t buy it.Using anything other than regular grade is simply a waste of money.
- Don’t top off your gas tank. Stop filling after the automatic nozzle shuts off the second time.
- If you have to replace a gas cap, make sure it is the right one for your car. An ill-fitting cap will increase emissions and trigger the “check engine” light.
- Keep track of gas mileage. If you notice a sudden decrease in fuel economy, have your vehicle checked by a technician to ensure it is operating properly.
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