The average American is going to pay nearly 40 cents less per gallon of gasoline this summer, according to the latest data from the Energy Information Administration (EIA), and save even more at the pump come the fall. The EIA reports:
In the July edition of the Short-Term Energy Outlook (STEO), EIA forecasts that the U.S. retail price for regular gasoline will average $2.25 per gallon (gal) this summer (April through September). The forecast price for this summer is lower than the 2015 summer average of $2.63/gal, but higher than the forecast from the April 2016 Short-Term Energy and Summer Fuels Outlook. The change in the forecast since April is largely attributable to increases in crude oil prices. […]
For the rest of the summer, EIA expects gasoline prices to decline from $2.37/gal in June to $2.19/gal in September. Declining retail prices are expected to be driven by declining gasoline wholesale margins, which are forecast to fall from 49 cents/gal in June to 33 cents/gal in September. Wholesale margins typically decline towards the end of summer as seasonal gasoline consumption falls. Crude oil prices are expected to be relatively unchanged at around $47/b for the rest of the summer.
The EIA notes that gas prices are going to be slightly higher than they projected back in April, largely because oil prices have climbed roughly $10 per barrel since those projections were made. This illustrates an important (if obvious) point: cheap gasoline has come about directly as a result of cheap oil. You might be saying that that’s self-evident, as gasoline is a refined petroleum product, and you’d be right to do so—but that causal relationship is important for understanding one of the biggest ways in which the shale revolution is helping Americans, because the oil price collapse has largely been precipitated by surging U.S. oil production. Upstart shale producers nearly doubled American oil output in a few short years, and helped create a global oil glut that drove crude prices—and eventually gas prices, too—down. So we have shale to thank for cheap gas.
Still, even with price expectations slightly up, drivers are far from being fleeced with an average price of just $2.25 per gallon these next few months. And if that’s too much to bear, you can always look forward to September, when gas prices are projected to average just $2.19 per gallon. Hail shale!