NEW YORK – The price of gasoline looks familiar this Memorial Day. For the third year in a row, the national average will be within a penny or two of $3.64 per gallon.
Stability wasn’t always the norm. Between 2003 and 2008 average retail gasoline prices more than doubled, reaching an all-time high of $4.11 per gallon in 2008. Prices then collapsed as the U.S. plunged into recession. But after a two-year run-up between 2009 and 2011, the price of gasoline has remained in a range of roughly $3.25 to $3.75 per gallon.
Drivers can handle that, according to AAA, and are ready to head out for Memorial Day driving trips in the highest numbers since 2005. “It is unlikely that gas prices will have a significant effect on travel plans compared to a year ago,” AAA wrote in its annual Memorial Day forecast.
Steady gasoline prices are largely the result of relatively steady crude oil prices, even though there has been a long list of global supply disruptions and political turmoil that that typically would push the price of oil higher.
Sanctions have sharply cut output from Iran, once the world’s third largest oil exporter. Libya went through civil war, and labor and political disruptions continue to limit its exports. Venezuela’s oil output has been steadily declining for a decade. Most recently, the conflict between Russia and Ukraine is raising concerns that sanctions will impact production or exports from Russia, the world’s second largest exporter after Saudi Arabia.
But rising crude output in countries such as the U.S., Canada and Brazil have offset the declining supply elsewhere, helping to keep prices steady.
Approaching this Memorial Day, the national average is $3.65 per gallon, according to AAA, OPIS and Wright Express. Last year on the holiday it was $3.63 per gallon. In 2012 it was $3.64.
The story is similar with other fuels. Through the first quarter of this year airlines are paying $3.03 per gallon for jet fuel – exactly the same they paid on average for all of last year, according to the Bureau of Transportation Statistics. The average price of diesel, $3.93 per gallon, is a nickel higher than last year.
Averages only tell part of the story, though. Tom Kloza, chief oil analyst at the Oil Price Information Service and Gasbuddy.com, compares the national average price of gasoline to the average temperature of the country – outside your door it’s almost certainly hotter or cooler than the average.
This year, drivers in the Midwest, Great Plains states and the Rockies are paying quite a bit less than they did a year ago on Memorial Day weekend. The Minnesota average of $3.49 is 78 cents lower than last year, the biggest drop in the nation. Drivers in North Dakota, Nebraska, Oklahoma, Iowa and Kansas are all paying at least 50 cents per gallon less.
That’s because last year some big Midwest refineries were taken offline to be upgraded to handle cheaper Canadian crude oil. That work is done and the refineries are churning out a lot of fuel, pushing down prices in the region.
The story is different on the coasts, though. Refineries there have to pay higher prices for global crude, and more refineries are seeing downtime in Texas and Louisiana than in recent springs, according to Kloza. Gulf coast refiners supply much of the nation, and especially the coasts, with fuel.
Pennsylvania drivers are paying $3.77 per gallon on average. That’s 27 cents higher than last year, the biggest increase in the country. Drivers in the Carolinas and Alabama are paying at least 20 cents more than last year, though they are paying less than the national average.
As usual, California drivers are paying the most in the lower 48 states, at $4.15 per gallon, about 10 cents higher than last Memorial Day weekend.
Across the nation, all U.S. drivers will likely be paying less in the coming weeks, the result of a typical seasonal decline between late spring and early summer.
“Temperate-to-lower prices is the most likely path for the next couple of months,” Kloza says. “And then in hurricane season you just cross your fingers.”