With One Caveat, Analysts Say Gas Prices Will Probably Continue to Drop in 2019
If you liked 2018’s gasoline prices, you’ll probably love 2019’s, according to analysts, who predict motorists will end up paying even less at the pump this year.
But they’re also quick to employ the word “caveat.”
Specifically, they point to uncertainty over the direction of the world economy, the political dysfunction in Washington, D.C., and continued efforts by oil-producing countries to curb overproduction.
The Organization of Petroleum Exporting Countries (OPEC) and Russia are under pressure to cut production even further than they’ve promised so far. Meanwhile, stocks of U.S.-produced crude have hit record levels. The end of 2017 found reserves of domestic crude up by 19.5 percent from year-end 2016, according to the federal Energy Information Administration (EIA). The reserves hit 39.2 billion barrels, surpassing the previous peak level of U.S. reserves of 39 billion barrels, set in 1970.
The overproduction goes hand-in-hand with record-low demand for gasoline. Despite record motor vehicle travel during the holiday season, demand was down nearly 900,000 barrels in December.
In an analysis of conditions last week, AAA concluded that “if stocks continue to grow amid low demand and low oil prices, motorists will likely see pump prices continue their descent as the country settles into winter.”
Amy Parmenter, public affairs manager for AAA Connecticut, said Monday that Connecticut’s average pump price was $2.55 per gallon, 30 cents more than the national average. Locally, the averages were:
• $2.65 in Bridgeport;
• $2.45 in Hartford;
• $2.57 in New Haven/Meriden; and
• $2.58 in New London/Norwich.
“Over the past week, nationwide we have seen a slight increase in gas prices, the first in three months,” Parmenter said, calling it the result of an increase in the price of crude oil and a slight increase in demand. “Here in Connecticut,” she added, “price is still falling slightly, down three cents on the week, 16 cents month over month, and 11 cents year over year.”
That said, “we do expect 2019 to be less expensive that 2018, always with the caveat that geopolitical events, weather incidents, and so forth could change that.”
GasBuddy, a Boston-based company that uses websites and apps to share crowdsourced, real-time fuel prices for locales throughout the U.S., likewise predicts an overall drop for 2019, to an average of $2.70 per gallon, or about 3 cents less than 2018’s average. For the average household, total spending on gasoline would fall slightly to $1,991, down $25 from 2018.
But that doesn’t preclude prices from jumping temporarily this year, according to the 2019 GasBuddy Fuel Price Outlook. The average national price could hit $3 or more as soon as May. “While the bargain-basement gas prices we’ve been seeing in areas across the country have been terrific and most welcomed, the party at the pump will likely wrap up in the next month or two,” says Patrick DeHaan, head of petroleum analysis at GasBuddy. He points to a strong economy and OPEC production cuts as reasons.
“While the national average failed to hit $3 last year, we have an even stronger possibility of seeing that ugly possibility [this year], which would push prices in some places from $1.99 today to over $3 this spring,” DeHaan says, adding it “would be an impressive and shocking turnaround in just a few months.”
But then DeHaan drops the c-word: “One caveat however, that may have motorists unexpectedly spending less is what happens in the White House.” Something President Trump does or says “could lead to a slow-down in the economy and take gas prices right along with it.”
“Buckle up for the extra volatility we’re going to see,” he says. “It could be nauseating.”
As of Monday, though, GasBuddy users were finding prices as low as $2.07 per gallon in New Britain and $2.09 in Waterbury.