On par with expectations, the national fuel price average in 2023 was more affordable than in 2022—with about a 50 cent-per-gallon decline, said Patrick De Haan, head of petroleum analysis at GasBuddy, Boston. The price at the pump averaged about $3.07 at the end of 2023, down from this year’s high of $3.86 on Sept. 16, according to GasBuddy.
“It hasn’t been too painful a year at the pump for most motorists compared to [2022],” said De Haan. “But I would still said that prices have been a bit elevated compared to prior to COVID.”
“Demand has stayed consistent.”
Average prices as of December were 30 cents lower than a year ago, De Haan said.
“But more significantly, diesel prices today are a dollar a gallon lower than a year ago,” he said.
The lowest price in 2023 was $3.06 on Dec. 18, according to Gasbuddy.
The fall in gasoline prices has tamed inflation significantly, De Haan said. The Consumer Price Index rose 3.1% in November from a year earlier, according to the latest report released by the U.S. Bureau of Labor Statistics in December. Part of this was due to lower gas prices, which dropped 6% in November, helping to offset rising costs in other areas like rent and medical care, the report showed.
However, 2023 still saw some volatility, similar to 2022, said Nasir Siddiqui, director of fuel sales at Bazco Oil, a 33-store chain operating under its Chillbox brand based in New Haven, Michigan.
- Chillbox is No. 191 on CSP’s 2023 Top 202 ranking of convenience store chains by store count.
Siddiqui pointed to the ripple effects of supply cuts by Saudia Arabia causing increases in the price of fuel. In September, Saudi Arabia and Russia extended voluntary oil production cuts through the end of 2023, trimming 1.3 million barrels of crude out of the global market and boosting energy prices, the Associated Press said in a September report.
“However, demand has stayed consistent,” Siddiqui said. “It’s pretty much been flat year over year, which [has] been a good thing for us.”
Refinery obstacles also caused surges in prices at times, De Haan said.
There were 124 unplanned mechanical issues reported at U.S. refineries in the first three quarters of 2023, up 53% from the 81 in the same period last year, according to IIR Energy, a research firm and division of Industrial Info Resources. These complications included compressor failures, loss of steam, tube leaks and more, and created surges in prices on the West Coast and the corn belt, De Haan said.
Looking ahead to 2024, there are other unknowns.
Imbalances after COVID and Russia’s war in Ukraine are continually resolving, De Haan said, and consumer behavior is slowly returning to what it was.
“I would expect the 2024 yearly national average to be a little bit lower than this year,” he said. “But there certainly could still be the seasonal volatility, the refining issues. There could be some pain at the pump next spring and summer. But overall, looking at a yearly picture, I think friendlier gas prices next year compared to what we saw this year.”
While De Haan predicts improvements in the national average, Bazco’s Siddiqui doesn’t see much change on the horizon, especially with conflicts abroad.
“There’s a lot of different variables that are continuing to affect the supply market, which therefore reflects the pricing market,” Siddiqui said.
However, Tom Kloza, chief oil analyst at Oil Price Information Service (OPIS), based in Rockville, Maryland, believes lower prices are on their way.
“Goldman Sachs has posited that next summer will see U.S. gasoline prices average around $3.90 per gallon,” he said. “I will take the ‘under’ on that prediction. Most of my instincts suggest that U.S. gasoline prices will be lower on balance in 2024 than in 2023. Part of the moderation is related to an aging population—people over 65 drive much less than younger folks and a small portion of the change is attributable to EVs.”
Plus, government initiatives might favor fuel prices this year.
“2024 is, of course, an election year, and the Biden Administration is laser focused on gas prices,” Kloza said. “They were errantly blamed for high prices in 2021 and 2022 so they recognize that the blame gets levied on the White House regardless of the real factors at play.”
EV Effects
While the amount of EV drivers is slowly ramping up, Nasir Siddiqui, director of fuel sales at Bazco Oil said, it’s not going to take down gas stations.
“I think there’s going to be a niche for those Tesla users or those EV users to stop in and charge at the high voltage stations,” he said. “But I don’t think it’s going to really take away too much from our overall gas demand initially in the next, let’s say 24 months.”
Patrick De Haan, head of petroleum analysis at GasBuddy, said that low fuel prices are deterring people from switching to EVs.
“Americans that have been seeing lower gas prices are a little bit less inclined to make the investment over to EVs,” De Haan said. “So while there’s been this feel that the pace is accelerating, I think in reality Americans are taking a step back from the pace of the transition given that gas prices have been a bit more affordable as of late.”
The demographic of Americans interested in EVs are in the 18-to-25-year age range, according to Gasbuddy’s Thanksgiving travel survey. As of July 2023, 2.4 million EVs are registered in the United States, according to the U.S. Department of Energy.
“Overall, 39% of Americans said that they’re more interested in EVs this year than last year,” De Haan said. “But again, the other side of that equation is that there are some Americans that are less interested in EVs now with the moderation of gas prices.”
Bazco plans to install three EV charging stations in the first quarter of 2024 and is looking into more.
“We don’t want to be the last one to the party,” said Siddiqui. “It will be an added convenience for the customers.”
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