Looks like metro Atlanta drivers are going to have another year of cheap gasoline.
Gas prices will likely drop to a low in February then climb to a high between $2.45 and $2.65 a gallon in late May, according to a Maryland-based gatherer of gas price reports from around the country.
That is below any higher of the past five years.
Moreover, the average price of regular in metro Atlanta today – $1.90 a gallon – is the lowest since the early days of the recession in 2008, according to GasBuddy.
The price of gasoline hinges on many factors – from local rents to refinery capacity – but the most important is the global price of oil. The market has been pushing prices lower for several years and, barring the unexpected, that will continue, said Patrick DeHaan, head petroleum analyst for GasBuddy. “While past history is never a guaranteed indicator of future performance, it does offer clues that are instrumental to short-term and long-term forecasts.”
Aggressive drilling in the United States retreated as prices fell, but there is still more oil on the market than there was a few years ago. Moreover, a global economic malaise has meant “tepid” demand for gasoline, he said. “That suggest(s) the overall trend of recent years should continue, and that means favorable outcomes for U.S. consumers.”
Right now, several stations in metro Atlanta are selling gas at less than $1.80 and at least one is pricing gas at $1.75 a gallon – which is close to the statewide average, according to GasBuddy.
A year ago, gasoline was about 29 cents a gallon more expensive in metro Atlanta.
The highest average price of the past 12 months came late last spring: $2.85 a gallon. A year earlier, the average price crested at $3.72 a gallon. The high was a few cents above that in 2013 and a few cents higher in 2012.
The average price last reached $4 a gallon in 2011, according to GasBuddy.
The region’s record high came in late summer of 2008 when the average price soared to $4.11 a gallon, according to GasBuddy.
None of those prices are adjusted to reflect inflation so they look elevated compared to the sub-buck prices of the 1960s. In 1965, for example, the average price of gasoline was 30 cents a gallon, according to the government’s Energy Information Administration.
But prices are, on average, more than seven times higher now, according to the Bureau of Labor Statistics: a dollar’s worth of goods in 1965 would cost $7.63 now.
So in 1965 dollars, today’s average price would be 25 cents, according to the BLS inflation calculator. To put it the other way around, a gallon of 1965 gas would be worth $2.26 in today’s dollars
Among major metro areas, at the peak, only four will have cheaper gas than Atlanta, according to GasBuddy: Dallas, Houston and Phoenix.
Energy prices are a large part of budgets for many consumers and companies, but they are not as crucial to the American economy as they used to be.
For decades, a spike in gas prices would likely flip the economy into recession and a plunge in prices would spur dramatic growth.
The average mileage numbers for American vehicles this past year declined as more people bought trucks and larger cars. But even so, vehicles are vastly more efficient than they used to be in the 1960s and 1970s. Companies are also much more aggressive about managing costs, often using technology to minimize trips and miles.
But gas prices still matter.
Nationally, drivers will spend $17 billion less this year on gasoline than they spent last year, estimated Gregg Laskoski, GasBuddy senior petroleum analyst. “While there are always some unforeseeable surprises, we’re confident that when we reach the end of the 2016, the roller coaster ride will net savings over fuel purchases of last year, especially for savvy motorists who shop for the cheapest gasoline prices.”
Of course, things may not play out as predicted.
Among the things that could push gas prices much higher: a hurricane or two in the Gulf of Mexico, an unexpected refinery shutdown or serious production problems in a major oil-producing nation.
For example, if the current tension between Saudi Arabia and Iran were to boil over into war between the two oil giants, it is probably safe to assume that prices would rise.