Many U.S. states are on track to see gasoline prices fall below $2 per gallon later this year, according to the experts at GasBuddy.
“Consumers, perhaps at 10,000 stations and maybe even more by Thanksgiving, should have access to sub-$2/gallon prices —mostly in the South,” says GasBuddy head of petroleum analysis Patrick DeHaan.
DeHaan claims seasonality plays a big part in determining the price of gas as we head into the colder months. According to the U.S. Energy Information Association, gas prices tend to peak in the summer when people increasingly hit the road because of the warm weather. From 2000-2018, the average monthly price of regular gasoline was about 35 cents per gallon higher in August than it was in January.
“There’s more price sensitivity in the summer when people have the means, the time off, the weather is good. Whereas in the fall months you don’t see so much of that discretionary, out of the blue, weekend travel. So, low gas prices may not spark a huge boom in demand this autumn,” DeHaan says.
“Motorists are very reactive to gas prices,” DeHaan says, adding that with gas prices expected to fall, Americans are set to find a few extra dollars in their bank accounts, DeHaan predicts certain driving destinations like amusement parks will do better while airlines won’t get a huge break.
“As gas prices fade into autumn, that’s good news for fast-casual restaurants, the Chipotle’s and McDonald’s of the world, when motorists have a little more cash in their wallet,” he says.
US-China trade war impact
Oil prices fell on Friday after Beijing announced retaliatory tariffs on U.S. crude. Speaking at the G7 summit over the weekend in Biarritz, France, President Donald Trump claimed the Chinese are looking to strike a deal with the White House. “I think they want to make a deal very badly. I think that was elevated last night. The vice chairman of China came out, he said he wants to see a deal made,” Trump said.
But despite the president’s efforts to inject optimism into the minds of investors, DaHaan says consumer confidence is hurting demand for gasoline.
“A lot of consumers out there that are filling their tank are still uncertain over this whole U.S.- China trade battle and I think their barometer, or the way they spend, certainly tracks that issue.”
“Come fall, we have some natural downside that we see and even if there is some sort of broad trade deal with China, motorists in a dozen or perhaps even more states, will get access to sub-$2/gallon prices,” he says.
Nick Rose is a producer for Yahoo Finance.