U.S. gas prices on Indpendence Day could be the cheapest since 2005

ALBANY — The U.S. average gas price, already below 2016 levels, appears to be poised for a Fourth of July average price that not only will be the lowest in a dozen years, but below where it stood on New Year’s Day.

If the average U.S. price Tuesday is below where it was Jan. 1, it would be the first time in at least 17 years that has occurred.

This week, GasBuddy, which surveys thousands of U.S. gas retail locations each day, projected that U.S. motorists will be paying an average of $2.21 a gallon on Independence Day, a penny more than they averaged in 2005. Since 2005, the American average for July 4 has varied between $2.61 (2009) and $4.09 (2008), with GasBuddy calculating the 10-year average at $3.14.

“It’s thrilling to see gas prices falling just in time for the most-traveled summer holiday,” Patrick DeHaan, senior petroleum analyst for GasBuddy, said earlier this week. “Perhaps we can finally get rid of the myth that gas prices go up for the holidays.

“Most importantly, motorists are getting a well-deserved break at the pump after years of high summer gas prices. This is like Christmas in July, instead of seeing fireworks at the pumps like we saw just a few short years ago.”

Last year, the average price in July 4 was 27 cents higher than on Jan. 1, according to GasBuddy’s survey. Over the past 10 years, the difference has ranged from July 4 being 6 cents higher (2012) to $1.04 (2008). The difference was $1.01 in 2009.

Earlier this year, market analysts were predicting summer gas prices as high as $2.70. Even more optimistic predictions bottomed out in the $2.45-$2.50 range. But if GasBuddy’s projection holds true Tuesday, motorists will be paying nearly a half-dollar less than what appeared to be the likeliest scenario as OPEC and other oil-producing nations began to implement an agreement to tighten supplies to keep crude oil prices up.

That effort didn’t have the effect the oil producers wanted.

“While OPEC cut production, U.S. producers ramped up and now domestic production is at nearly two-year highs,” DeHaan told The Albany Herald on Friday. “Because of OPEC’s reluctance at a meeting in May to make further cuts, oil prices have fallen on the likelihood of a supply glut continuing.”

If that happens, it comes despite robust demand. In late May, GasBuddy released its survey on summer travel, with 82 percent of respondents saying they planned to go on a road trip sometime during the Memorial Day-Labor Day travel period, a rate that was 7 percent higher than last year and up 9 percent from 2015.

Seven out of 10 planned to take more than one trip, and nearly three out of five (56 percent) planned to travel at least 500 miles round-trip, with three-quarters of the respondents saying they planned to take a trip that was not keyed to a holiday weekend. About 17 percent said the low gas prices factored into their travel plans.

It may be possible that motorists already have seen the highest prices of 2017. While this usually occurs between Memorial Day and mid-June, the peak may have come back in April.

“Yes, we peaked April 21 nationally,” DeHaan said, though he added that it is too early to declare that the top price for the year. “It’s too challenging to say because of the risk of supply disruptions from major hurricanes or other events,” he said. “I’d say there’s a possibility we have (peaked), barring major unexpected disruptions.”

This time of year, eyes turn to the Atlantic for tropical storm systems that might disrupt Gulf area production. On Friday, the National Hurricane Center reported that forecasters did not expect any tropical cyclones to develop in the next five days.

It’s been a difficult year to get a handle on forecasting prices. Normally, gas prices bottom out in mid-February and steadily rise between then and Memorial Day as demand goes up and refineries switch from winter blend to summer blend production, taking the opportunity to perform maintenance during the switch-over process. That can reduce supply at the same time demand is rising, further fueling higher prices.

The first half of 2017, however, has not followed normal trends.

“The environment to accurately forecast has been challenging since OPEC’s 2014 policy change to open the spigots, so to speak,” DeHaan said. “Predicting the effects and cuts has been indeed challenging.”

On Friday, GasBuddy’s survey had the U.S. average at $2.231. Georgia’s average Friday was at $2.076, and metro Albany, which had an average that had dipped a tenth of a cent below the $2 mark on Thursday, was at $2.019.