This summer you’ll be able to fill up on gas for less than you have in over a decade, according to the Energy Information Administration. The EIA reports:
The U.S. Energy Information Administration forecasts that U.S. drivers will pay an average of $2.04 per gallon (gal) this summer for regular gasoline, according to EIA’s Short-Term Energy and Summer Fuels Outlook. The forecast price for summer 2016 (which runs from April through September) is 59 cents/gal lower than the average price last summer, and it would be the lowest average summer price since 2004. Monthly average gasoline prices are expected to increase to $2.08/gal in June, then fall to $1.93/gal in September.
…For the full-year 2016, EIA forecasts U.S. regular gasoline prices to average $1.94/gal. Based on this annual average price, EIA estimates the average household will spend about $350 less on gasoline in 2016 than in 2015 and about $1,000 less than in 2014, when retail gasoline prices averaged more than $3/gal.
Cheap gasoline is coming courtesy of cheap oil, which in turn has come courtesy of the shale revolution which has transformed America’s energy landscape practically overnight, boosting our crude production from just over 5 million barrels per day in 2008 to more than 9 million bpd today. Those new supplies have contributed to the roughly 1.5 million bpd glut in the global crude market today—an oversupply that’s helped to bring oil prices down from more than $110 per barrel in June 2014 to $44 per barrel today.
OPEC and non-OPEC producers alike are meeting in Doha on Sunday to attempt to ratify a plan to freeze their collective output at current levels, a rather weak attempt to help induce a price rebound and alleviate the financial stress the price collapse is putting on suppliers. When they convene, they’ll be united by a common enemy: the upstart American shale producers that seemingly out of nowhere set off this price slide and have surprised analysts with their ability to keep the crude flowing.
For the U.S., the shale boom isn’t just a boon to energy security and our overall energy trade balance—it’s also an economic shot in the arm. American drivers will be reminded of that when they save money at the pump this summer.