Energy Economy

Gas Prices Head Back Toward $2

The Energy Information Administration (EIA) issued a report suggesting gasoline prices will remain low through the summer months. The forecast of average gas prices was low enough that some portions of the United States will need to have $2 gas for the EIA number to be accurate.

In its most recent Short Term Energy Outlook, EIA researchers wrote:

During the 2015 April-through-September summer driving season, regular gasoline retail prices are forecast to average $2.45/gallon (gal) compared with $3.59/gal last summer. Based on EIA’s gasoline price forecast, the average U.S. household is expected to spend about $700 less on gasoline in 2015 compared with 2014, as annual motor fuel expenditures are on track to fall to their lowest level in 11 years.

GasBuddy’s analysis of the U.S. market puts the average price of a gallon of regular at $2.39. That is down from $2.46 a month ago and $3.59 a year ago, confirmation of EIA’s the report.

GasBuddy data show that the price of gas has dropped back toward $2 in several states and is already pennies above that level in several cities. Gasoline in South Carolina is $2.08 a gallon, in Tennessee $2.13, in Mississippi $2.14 and in New Jersey $2.16. In Chattanooga, the price has dropped to $2.03, in Spartanburg $2.07 and in several other South Carolina cities have prices below $2.10. In a cluster of Texas cities, the price is below $2.15.

ALSO READ: U.S. Summer Gasoline Prices Projected at 11-Year Low

Granted, cities and states with the lowest gas prices sit near refineries and in states with low gas taxes. The taxes are among the lowest in the country in New Jersey, Tennessee, Mississippi and South Carolina. The consumer does not care about the reasons. The cost to drive this summer will be low.

Oil prices are the most critical component in the price of gasoline, and despite occasion spikes higher, these prices have hovered around $50. There are very few reasons that number should change. Supplies, whether they are from the United States or Saudi Arabia, are just too high.