The summer driving season has just begun, but gasoline prices at the pump may be ready to drop following steep declines in the price of crude oil.
In a report released Thursday, motorist and leisure travel group AAA said drivers may have already seen the highest prices of the year and eventually mark a summer average below that of last year’s, which averaged $2.87 a gallon from Memorial Day to Labor Day.
“AAA forecasts gas prices to be at least a dime cheaper [from current levels] through end of summer for a majority of motorists” to a national average of $2.70 a gallon for the season, said Jeanette Casselano, a spokeswoman for AAA, adding that prices had already dropped a dime since the beginning of May.
On Wednesday, the national average for regular unleaded gasoline stood at $2.795 a gallon, according to AAA. That’s down from $2.894 a month ago and $2.94 a year ago.
Expectations for cheaper prices differ from other forecasts that came out just ahead of the start of the summer driving season, which said gas prices may still have room to climb.
Casselano attributed expectations for lower gas prices to “most refineries operating at normal levels, demand at robust rates and cheaper crude oil prices.”
Futures prices for the U.S. West Texas Intermediate crude benchmark settled at $51.68 a barrel Wednesday — the lowest for a front-month contract since Jan. 14, according to Dow Jones Market Data. The settlement marked WTI’s entry into a bear market, with prices down 22% from their most recent high in April.
Read: Oil just fell into a bear market — here’s why
Crude oil prices stand at a much cheaper level than last summer, when prices ranged between $65 and $73 per barrel, AAA said in its report. “Historically, crude oil prices and domestic gasoline demand have determined the price Americans pay at the pump in the summer months. And that’s no different this summer,” said AAA.
AAA said it is monitoring a “number of circumstances that could cause crude oil market prices to increase,” including reductions in global and domestic crude supply, exports and U.S. gasoline demand.”
Casselano pointed out that trade tensions, with Mexico or China or elsewhere, can certainty have an impact on crude oil and thus retail gas prices.
“Mexico is a leading country we exports crude from, and is also a leading country we export gasoline to,” she told MarketWatch. “If gasoline exports decrease due to trade tensions, that could lead to a glut of supply in the U.S. and ultimately drive gas prices down amid robust summer demand.”
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