AAA Forecasts Pump Prices to Drop Most Significantly West of the Mississippi   

The end of the year historically ushers in some of the cheapest gas prices of the year. This was true in 2018 when the national gas price average was recorded at $2.26 on December 31. However, the national gas price average won’t go that low this month. AAA forecasts that gas prices will edge lower than they are today with the national average falling between $2.40-$2.45, which will be 15-20 cents more than last December.

“Depending on where you live in the country, you will see gas prices drop anywhere between a nickel and a quarter this month. While that will offer savings to motorists, it is not as much as they saw last December,” said Jeanette Casselano, AAA spokesperson. “Gas prices are more expensive year-over-year in part due to higher crude prices this winter over last.”

Winter Regional Outlooks

Motorists west of the Mississippi are positioned to see some of the most significant gas price savings. Here is AAA’s outlook for winter by region:

• West Coast: After a number of refineries underwent planned and unplanned maintenance, pump prices spiked earlier this fall as a result of tight gasoline supply in the region. The good news is the current supply levels are at a surplus since mid-November. These increased gasoline stock levels, amid lower demand, have helped to push prices down this month and will likely continue to put downward pressure on prices in the winter months ahead. Motorists are likely to see gas prices decrease as much as a quarter in the foreseeable future.

• Rockies:  Motorists in the region will see some of the most drastic pump price drops between now and the end of the year thanks to high refinery run rates and healthy gasoline stock levels. Like the West Coast, the Rockies could see gas prices be as much as a quarter cheaper heading in to the new year.

• South and Southeast: Gas prices are expected to edge cheaper by at least 15 cents in the coming weeks as regional refinery rates and gasoline stocks increase throughout the South and Southeast region. Currently, stocks sit have registered at a healthy 80 million bbls or more since mid-November.

• Great Lakes and Central States: The region is no stranger to volatility at the pump and this winter will not be any different. AAA forecasts gas prices to edge cheaper by as much as a dime throughout the Great Lakes and Central region, but warns motorists to expect the normal price fluctuation – potentially large swings – from week-to-week. 

• Mid-Atlantic and Northeast: Despite a major reduction in operations due to the fire at the Philadelphia Energy Solutions (PES) refinery this summer, regional gasoline stocks sit at a relatively healthy level, thanks to imports. This has helped to keep regional gas prices trending cheaper along with the national average. AAA expects the region to see prices continue to decrease into the new year, but at a slow and small pace – most likely no more than a dime.

Oil Dynamics

Higher crude prices this winter, when compared to last winter, will contribute to more expensive pump prices. Last winter, crude prices were mostly $44-$52 per barrel; however, this winter’s prices could go over $60 per barrel as the Organization of the Petroleum Exporting Countries (OPEC) and its partners continue to reduce production to reduce global supply.

In early December, OPEC and other major global producers, including Russia, announced an agreement to cut their total crude production by an additional 500,000 b/d. The new OPEC production reduction agreement brings the total production cut to 1.7 million b/d, beginning on January 1, 2020. It is unclear how long the new agreement will be in place, but OPEC will likely review it and announce any amendments at its next meetings on March 5 and 6 in Vienna, Austria.

“The reduction in global crude supply is expected to help drain the market, which will likely be oversupplied during the first half of next year,” added Casselano. “This could potentially mean expensive crude oil and gas prices in January as compared to the start of recent years, assuming crude demand remains robust.”

In addition to the OPEC reduction, market analysts continue to have concerns about a reduction in global crude demand – a result of the ongoing trade war between the U.S. and China.

Savings with Shell and AAA

This month, AAA members can fill up for even less at Shell stations through the Fuel Rewards® at Shell Holiday Bonus Offer. In addition to the five cents per gallon offered through Fuel Rewards, members will receive an additional 25 cents per gallon on their first fill up after registering for the first time as a Fuel Rewards member (30 cents total), through December 31, 2019. This bonus offer is not available to existing Fuel Rewards members.

Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad, and Android. The app can also be used to map a route, find discounts, book a hotel, and access AAA roadside assistance. Learn more at AAA.com/mobile.