The summer driving season appears quite promising for both gasoline retailers and motorists. Gasoline prices remain relatively low even as prices begin their seasonal march higher.
Based on GasBuddy’s 2015 gasoline price forecast, summer gasoline prices across the United States will be at their lowest since 2010, when the recession and gasoline demand were responsible for keeping gasoline prices
at low levels. And while 2010 saw paltry gasoline demand in a weak economy, this year’s low gasoline prices come at a time when the economy is experiencing robust improvements and declining unemployment, leading to a much more thriving environment for such prices.
With crude-oil inventories remaining at all-time seasonal highs and well above comfortable levels, the major wild card for summer gasoline prices lies with refineries and a turnaround season that could feature more unexpected complications, such as ExxonMobil’s Torrance, Calif., refinery explosion in February, and various maintenance glitches that are par for the course during seasonal refinery maintenance.
Demand Heats Up
Though refineries and their maintenance may lead to temporary price spikes that bring the ire of motorists that have grown tired of spring increases in gasoline prices, U.S. crude-oil inventories have been approaching
capacity, keeping prices for oil low. This bodes well for gasoline prices once refinery maintenance and the introduction of EPA-mandated clean-burning summer gasoline are complete.
Gasoline prices will likely be in decline ahead of Memorial Day and into the month of June, and could stay well below peak spring prices for the summer months. Much of the United States will see summertime gasoline prices in the low- to mid-$2-per-gallon range. Meanwhile, perennial top dogs such as California and major cities such as New York and Chicago will see prices return to $3 per gallon or higher—still far lower than 2014’s peak and summer prices.
Retailers with competitive prices are best positioned to take advantage of forecasts for improved summer gasoline demand, according to a NACS study on gas prices and consumers. The study shows that low gasoline prices are a boost to the psyche of motorists. In January, 24% of gas consumers said they are driving more, while just 8% said they are driving less. Sixty-eight percent said they will drive about the same. The number of gas consumers who said they would drive less was at its lowest level in a year.
Traveling Mood
Meanwhile, a recent GasBuddy analysis of the gap between cheapest and most expensive gasoline prices has shown that motorists can save substantially by shopping for the lowest gasoline prices; in some cases, the savings are significant. Washington, D.C., Chicago, Houston, Bakersfield, Calif., and Grand Junction, Colo., were the cities in each region that GasBuddy showed had an exceptionally wide variety of gasoline prices, with spreads of more than 50 cents per gallon.
Travel trends also show that motorists have been taking advantage of the lower prices, according to U.S. Department of Transportation data. Travel on all roads and streets saw a rise of 4.9% in January, the most recent month for which data is available. This follows on the heels of a 5.0% jump in December. These numbers show that travel gains remain healthy, even in light of winter storms that hit the North during the coldest months.
If gasoline prices remain at a low level through the summer, as GasBuddy expects, retailers in the months ahead will see improved gasoline demand and more stops at c-stores that sell fuel, along with lower swipe fees as prices remain low, and generally healthy margins.
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