BOSTON -- For the past four years, the national average retail price of gasoline has dropped, thanks in large part to falling crude prices. For 2017, expect a reversal of fortune.
The 2017 Fuel Price Outlook from Boston-based GasBuddy projects a 36-cent-per-gallon (CPG) jump in the national retail average from the year prior. Supporting this forecast: the deal by the Organization of the Petroleum Exporting Countries (OPEC) and nonmember countries such as Russia to curb their oil production by 1.2 million barrels per day, beginning in January.
Estimates by Morgan Stanley and Goldman Sachs suggest that this could push prices of West Texas Intermediate (WTI) crude above $60 per barrel in 2017, a projection with which GasBuddy agrees. According to the most recent figures from the Energy Information Administration (EIA), the price of crude makes up more than 48% of the price of regular gasoline.
While consumer spending on fuel would grow, continuing economic growth and decisions made by the incoming Trump administration to increase domestic supply could blunt the effects.
“While gasoline prices nearly always follow the same direction as crude oil and represent an important barometer for consumers and their personal budgets, the increases we anticipate this year may be met with less resistance than in the past if economic improvement softens the blow,” said GasBuddy senior petroleum analyst Gregg Laskoski in a statement. “If the Trump Administration delivers on its promises—lower taxes, more jobs, higher salaries and savings—then a concurrent increase in demand and gasoline prices may be easier to digest.”
Three additional factors that could affect these forecasts: unscheduled refinery shutdowns, weather and infrastructure incidents, such as the two shutdowns of the Colonial Pipeline in second-half 2016.
Read on for four projections on fuel prices and consumer spending in 2017 ...
Gasoline price average
GasBuddy projects a national average price of $2.49 per gallon for 2017, which is 36 CPG higher than 2016. It expects the average to peak in May at $2.67 per gallon, then decline through the second half of the year before falling to $2.37 by December, following seasonal patterns.
The average price in individual markets would vary by region. GasBuddy projects the peak daily average in San Francisco, for example, to range from $3.50 to $3.85, and $3.15 to $3.50 per gallon in Chicago. Both markets tend to trend higher than the national average.
GasBuddy forecasts lower city averages in the Southeast and South in 2017. For example, Dallas and Houston’s peak daily averages would range from $2.50 to $2.70 per gallon, and the averages for Tampa, Fla., would fall between $2.65 and $2.95 per gallon.
The national retail price average for diesel fuel in 2017 is a projected $2.71 per gallon. GasBuddy expects the average to begin in January at $2.55, peak in June at $2.88 per gallon and end the year at $2.81 per gallon in December.
To see the full GasBuddy 2017 Fuel Price Outlook, click here.