While the summer tourist season is decidedly over, plenty of RVers are still on the road. Snowbirds heading for warmer destinations may be concerned about the price of road fuel. Fuel industry analyst GasBuddy may have some good news. Gas prices could drop 9% by the end of December.
Gas prices could drop—counterintuitive
It seems counterintuitive if you’ve been following the price of crude oil. But hold on, last Friday gas prices across the country were down 8% from the September peak, to an average of $3.558—so says AAA. They reckon that accounts for $5 less per the average car fill-up.
What accounts for this crude-up, gas-down conundrum? Insider.com interviewed GasBuddy’s chief petro analyst, Patrick De Haan, to find out.
Essentially, De Haan says crude prices aren’t the only factor in how much drivers pay at the pump. He points out crude oil accounts for only about 55%-60% of the cost of gasoline. Demand factors in a big way, and as ambient temperatures go down, so does the amount of driving by Americans.
Result? He predicts this: “I do think that we’re going to make a run at prices that are in the low $3–range by the end of the year,” he said, citing a ballpark estimate of $3.25–$3.35 a gallon that represents a drop of up to 9% from current levels.
Crystal ball gazing
Of course, crystal ball gazing can become a bit murky when splashed with other oil market factors. Should the current Mideast conflict escalate, prices could go up. On the other hand, there are new oil refineries set to come online in Nigeria and Mexico. Their output could pump more finished product into the American pipeline, offsetting other price increases.