Expect New Highs in New Year for Gas Prices

CARS.COM — What a difference a year has made in gas prices. The national average of $2.29 a gallon for regular gas is 29 cents higher than a year ago, and prices look primed to climb higher as major oil-producing countries begin reducing output in January.

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A year ago, the national average for regular was $2 a gallon, and 70 percent of stations across the country were selling gas for less than $2, according to GasBuddy.com. Today less than 10 percent of stations are selling below $2.

At this time last year pump prices were on a steady slide that lasted into February, when the national average fell to $1.70 a gallon. In contrast, GasBuddy and the AAA Daily Fuel Gauge Report on Wednesday said the national average for regular rose 4 cents the past week — the fifth week in a row for increases.

“Motorists hoping for last winter’s cheap gasoline are likely to be sorely disappointed this winter as sub-$2-per-gallon prices will be far less common,” GasBuddy analyst Patrick DeHaan said in a blog post.

With regular averaging 29 cents more than a year ago, the cost of pumping 15 gallons is $4.35 higher. Though that isn’t a budget-buster for many motorists, the cost looks likely to go higher in the coming weeks as the Organization of Petroleum Exporting Countries and other oil-producing countries cut back in January to boost global oil prices.

U.S. oil prices have increased more than 25 percent to $54 a barrel since OPEC announced plans for the production cut at the end of November. At $54, oil is more than double what it traded for in February.

How much pump prices will increase, though, is hard to predict. AAA noted in a news release that demand for gas typically drops in January as most motorists do less driving, and the lower demand puts downward pressure on pump prices.

DeHaan said prices could even decline in mid-January, at least temporarily.

“A decline is likely as refiners begin offering winter-grade gasolines at low prices to draw down on supplies before doing maintenance and beginning the long transition to cleaner summer blends of gasoline,” he said.
In the meantime, though, prices rose in all but a handful of states the past week.

The Great Lakes area again saw some of the biggest increases. Average prices for regular jumped 7 cents a gallon in Illinois and Minnesota, 9 cents in Ohio and 11 cents in Wisconsin. Over the past two weeks, prices have climbed 18 cents in Ohio and Wisconsin, to $2.37 and $2.32, respectively.

South Carolina had the lowest statewide average for regular, $2.06, followed by Mississippi and Missouri at $2.08. A year ago, the average price in Missouri was $1.70. (Prices fluctuate throughout the day and could change.)

Hawaii had the most expensive gas at $2.97, followed by California, $2.70; Alaska, $2.65; Washington, $2.63; and the District of Columbia, $2.58. GasBuddy said California is one of only two states where gas is cheaper than a year ago, when the average for regular was $2.83 a gallon. Nevada is 10 cents cheaper than a year ago at $2.41. Premium gas rose 3 cents the past week to $2.78, and diesel fuel rose 2 cents to $2.47. Premium is 27 cents higher than a year ago and diesel is 20 cents higher.