Motorists are expected to finally catch a break this summer with modestly cheaper fuel costs, though prices will still vary greatly from one region to another.
Vacationers should continue to see some welcome relief at the pump between now and Labor Day as gasoline prices are expected to be more affordable – albeit nominally – than they’ve been in the last three summers.
Retail gas prices are anticipated to average $3.63 a gallon during this summer’s driving season, according to the Short Term Energy Outlook compiled by the U.S. Energy Information Administration in Washington, D.C. This figure is slightly below the $3.69 figure recorded last year and the average $3.71 in summer of 2011.
This sunny forecast is based largely on an expected decline in crude oil prices combined with higher gasoline inventory levels and a continuing drop in demand due to increased small-car sales and other factors. The EIA predicts the price of Brent crude oil (a benchmark that’s tied to wholesale gasoline costs in the U.S.), will average $107.50 per barrel this summer, which would be around $1.50 less than it was during the same period in 2012.
Of course, gasoline prices continue to vary by region, often wildly. For example, those living in Chicago suffered the highest prices in the nation this spring despite sizable drops elsewhere in the country. Those living on the West Coast will likely see the highest gas prices during this year’s vacation season with the EIA predicting an average of $3.89 a gallon, while residents of the Gulf Coast will enjoy the lowest fuel costs at an average of $3.47. At that, gasoline will still tend to cost more in larger U.S. cities where pricier summer-blend fuel is mandated for environmental reasons.
What’s more, gasoline taxes vary from state to state, further affecting the price. Though the average state gasoline tax is 23.5 cents per gallon, Alaska and Georgia charge just eight cents per gallon, and California charges a whopping 38.2 cents per gallon. And this is on top of a federal gas tax of 18.4 cents per gallon and any county and city taxes that may apply.
But will less-volatile gas prices give consumers the itch to jump back into big cars and trucks with the same vigor as they did back in the early 2000s? Not likely. Consumers, perhaps numbed by the rollercoaster behavior of fuel prices over the past five or six years, don’t seem to be particularly reactive to even relatively major swings these days.
A one-dollar variation in gasoline prices can be expected to account for just a 0.7 difference in small car sales at the one end of the new-vehicle spectrum and a 0.5 percent difference in full-size pickup truck sales at the other, according to a study conducted by the research company Experian Automotive in Schaumburg, Ill.
Experts say the hottest-selling segments in the auto business should continue to be fuel-efficient small and midsize cars and crossover SUVs (including compact models), which together account for around two-thirds of all new-vehicle sales. Meanwhile, the large car market, which dropped from 5.8 percent of the market in 2008 to 3.5 percent last year is anticipated to further deflate to just 2.7 percent by 2015, according to the research company R.L. Polk in Southfield Mich.
Large pickup truck sales, which enjoyed modest increases during 2012, should continue to rally, though gas prices are not expected to be a major factor. According to the Wall Street Journal, the economic recovery – particularly in the housing sector – is driving pickup sales, with builders and contractors, punished by the drop in new-home building caused by the economic crash of 2008, now meeting a pent-up demand to replace old vehicles. Pickups will further enjoy a boost with redesigned versions of the Chevrolet Silverado and GMC Sierra and the updated Toyota Tundra later this year, followed by a new version of the segment leading Ford F-150 during 2014.
© CTW Features