The average American is paying $3.45 per gallon at the gas pump — a price nowhere near the historic $5 or more experienced last summer, but not far removed enough to feel comfortable. The government’s attempts to slow inflation have been working for the last several months, but there are certainly still concerns about the economy, including what future gas prices could look like. Keep reading for a quick look at what to expect this year.
Will Gas Prices Go Up or Down in the Future?
Future gas prices depend on a number of factors that aren’t easy to predict, but as a benchmark, theU.S. Energy Information Administration released predictions for lower gas prices, averaging $3.32 per gallon in 2023 and $3.09 per gallon in 2024 for regular gasoline.
That being said, much is unknown about how the U.S. economy will fare in 2023 and how it will interact with global factors that have the power to influence future gas prices. Two factors currently impacting prices are the war in Ukraine and increased demand as China reverses its zero-COVID policy. Predictions on record point to an easing in the price of oil — but based on the pricing activity in 2023 to date, consumers should be prepared for fluctuations.
Typically, demand — and therefore prices — rises in the spring as drivers spend more time out of their homes. Thus, several industry executives expect that in the short-term, gas prices could still be on their way up.
How High Will Gas Prices Be in 2024?
The U.S. Energy Information Administration began this year with a prediction that both 2023 and 2024 would usher in declines in gas prices. At that time, the government entity forecasted an average $3.09 per gallon in 2024 for regular gasoline. Highway diesel, respectively, is forecasted to be $3.70 per gallon in 2024, on average. Keep in mind that these are predictions, and unforeseen events have a huge impact on prices. Additionally, any predictions for 2025 and beyond are likely to see major revisions.
What Factors Affect Gas Prices?
Factors that influence the cost of gas include:
- The cost of crude oil
- Refinery costs and operations, particularly in the event of weather stressors
- The cost of marketing and distribution
- Federal and state taxes
Changes in one or more of these factors affect how much consumers pay at the pump. Since the largest share of the retail price of gas is represented by crude oil costs, when the cost per barrel goes up, consumers see a direct jump in prices at the pump. However, other factors like the worldwide demand for gas, especially as COVID restrictions ease, and declining emergency support as the federal government diverts resources elsewhere can have an impact.
Although the EIA’s initial predictions for fuel prices in 2023 and 2024 may provide some comfort, reality has proven more nuanced so far. The cost of gas is influenced by production, demand and beyond, so the road to more affordable fill-ups may very well be a curvy one.
Bob Haegele contributed to the reporting for this article.
Information is accurate as of March 21, 2023.
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