Labor Day gas prices to be lowest in 11 years
With stock markets hitting some major bumps recently, cheap gasoline should provide Americans a far smoother ride this Labor Day weekend and the likely prospect of $2 pump prices by Christmas.
Average regular unleaded will cost the least for the Labor Day break since 2011, AAA says. The national average was $2.44 a gallon Thursday, down nine cents over the past week and $1 below the year-ago price.
Prices have fallen sharply in recent days and are expected to continue to edge down through the weekend after BP's refinery in Whiting, Ind. — the largest in the Midwest — was repaired in late August, increasing gasoline supplies, says AAA spokesman Avery Ash. The facility was unexpectedly shut down earlier in the month.
As of Thursday evening, the average gas price in the Indianapolis area was $2.29 per gallon, with a lowest reported price of $2.09, according to GasBuddy.com.
The lower costs are coming despite what AAA expects to be the busiest Labor Day weekend for motorists since 2008, with 30.4 million travelers hitting the road, up 1.1 percent from a year ago. Credit solid job and income growth, along with the bargains at the pump.
Gas prices generally have traced the dramatic decline in oil prices since February amid high crude production both in the U.S. and overseas, and concerns about weakening global demand.
Oil prices have been volatile recently, dropping below $40 a barrel early last week for the first time in six years and then rallying as much as 28 percent in recent days on reports of lower-than-estimated U.S. production and possible cuts in output by the Organization of the Petroleum Exporting Countries. West Texas Intermediate futures closed up 50 cents Wednesday at $46.75 a barrel, though that's still down from about $61 early this year.
The recent oil rally could filter into gasoline, modestly propping up prices after the holiday weekend, Ash says.
Yet pump prices are headed down in coming months, analysts say. They remained higher than the fall in oil would suggest because of the most active U.S. summer driving season in eight years and requirements for reformulated summer gasoline blends.
Both will be over by mid-September, pushing down gas prices, and the slide will intensify after seasonal refinery maintenance ends in mid-October, says Gregg Laskowski, a senior petroleum analyst at gasbuddy.com.
"We definitely believe gas will follow a downward trend for the remainder of the calendar year," Laskowski says. Gas, he says, is likely to fall below $2 a gallon nationally by December.
Gas prices average $2 a gallon can already be found in South Carolina, while Alabama, Mississippi, Tennessee and Louisiana hover slightly above that level. The most expensive states are Alaska, at $3.40, California, at $3.31, and Nevada, at $3.11.