Analysts at GasBuddy and the U.S. Energy Information Administration expect fuel prices to continue to fall throughout 2024, with consumers paying the lowest price per gallon since 2021.
According to GasBuddy’s annual Fuel Price Outlook, the average cost will drop from $3.51 per gallon in 2023 to $3.38 in 2024.
The combination of growing U.S. production and greater inventories appears to be playing a role in the decrease in costs, but the technology company warns significant potential risks remain that could alter price reductions.
Geopolitics and weather events such as a historic arctic blast or a hurricane can significantly impact the production and distribution of fuel.
A gasoline station attendant pumps gas into a car. (Credit: Sean Gallup/Getty Images)
Even a ransomware attack in 2021 that shut down a major pipeline caused prices to rise as Americans panicked as the vulnerabilities of infrastructure became apparent.
"The global refining picture continues to improve, providing more capacity and peace of mind that record-setting prices will stay away from the pump in 2024. I anticipate that we'll still have some volatility, unexpected outages and disruptions, and potentially weather-related issues, but I do not expect it to lead to record prices. Offsetting OPEC+'s production cuts is contributing to the rise of U.S. oil production, which now stands at record levels. Combined with Canada, North American oil production could further stabilize countries that have decided to curb oil production," Patrick De Haan, head of petroleum analysis for GasBuddy, said in a statement.
Even though outlooks suggest the yearly decline could be $0.10-$.20 per gallon, rises and falls, especially around peak travel periods, are expected.
GasBuddy predicted Memorial Day could see the steepest hikes at the pump, with the national average rising to around $3.56-$4.04 per gallon.
The Consumer Energy Alliance says refiners usually switch to a summer blend of gasoline during the spring, which can cause production slowdowns and increased costs for customers.
Analysts suggested some communities along the West Coast could briefly reach the $6 mark during busy travel periods, with major cities elsewhere in the country reaching a maximum of $4 during the late spring or early summer.
The decrease in cost means consumers are expected to spend around $200 per month on fuel for vehicles in 2024, which is down more than 12% from record highs in 2022.
"As 2023 fades away, I'm hopeful those $5 and $6 prices for gasoline and diesel will also fade into memory," De Haan stated.
Late last year, the U.S. Energy Information Administration said it expected natural gas bills to also decline by more than 20% due to the impacts of a warm winter and increased supplies.