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The average American is paying $3.45 per gallon at the gas pump — a price nowhere near the historic $5 or more experienced last summer, but not far removed enough to feel comfortable. The government’s attempts to slow inflation have been working for the last several months, but there are certainly still concerns about the economy, including what future gas prices could look like. Keep reading for a quick look at what to expect this year.
Will Gas Prices Go Up or Down in the Future?
Future gas prices depend on a number of factors that aren’t easy to predict, but as a benchmark, theU.S. Energy Information Administration released predictions for lower gas prices, averaging $3.32 per gallon in 2023 and $3.09 per gallon in 2024 for regular gasoline.
That being said, much is unknown about how the U.S. economy will fare in 2023 and how it will interact with global factors that have the power to influence future gas prices. Two factors currently impacting prices are the war in Ukraine and increased demand as China reverses its zero-COVID policy. Predictions on record point to an easing in the price of oil — but based on the pricing activity in 2023 to date, consumers should be prepared for fluctuations.
Typically, demand — and therefore prices — rises in the spring as drivers spend more time out of their homes. Thus, several industry executives expect that in the short-term, gas prices could still be on their way up.
How High Will Gas Prices Be in 2024?
The U.S. Energy Information Administration began this year with a prediction that both 2023 and 2024 would usher in declines in gas prices. At that time, the government entity forecasted an average $3.09 per gallon in 2024 for regular gasoline. Highway diesel, respectively, is forecasted to be $3.70 per gallon in 2024, on average. Keep in mind that these are predictions, and unforeseen events have a huge impact on prices. Additionally, any predictions for 2025 and beyond are likely to see major revisions.
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What Factors Affect Gas Prices?
Factors that influence the cost of gas include:
- The cost of crude oil
- Refinery costs and operations, particularly in the event of weather stressors
- The cost of marketing and distribution
- Federal and state taxes
Changes in one or more of these factors affect how much consumers pay at the pump. Since the largest share of the retail price of gas is represented by crude oil costs, when the cost per barrel goes up, consumers see a direct jump in prices at the pump. However, other factors like the worldwide demand for gas, especially as COVID restrictions ease, and declining emergency support as the federal government diverts resources elsewhere can have an impact.
Final Take
Although the EIA’s initial predictions for fuel prices in 2023 and 2024 may provide some comfort, reality has proven more nuanced so far. The cost of gas is influenced by production, demand and beyond, so the road to more affordable fill-ups may very well be a curvy one.
Bob Haegele contributed to the reporting for this article.
Information is accurate as of March 21, 2023.
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- AAA. "Gas Prices."
- U.S. Energy Information Administration. 2023. "EIA expects U.S. gasoline and diesel retail prices to decline in 2023 and 2024."
- Forbes. 2023. "Inflation Fell To 6% In February—But Some Experts Fear Banking Crisis Could Make Prices Worse."
- U.S. Energy Information Administration. "Gasoline explained."
- Forbes. 2023. "When Will Gas Prices Go Down?"
As an expert in energy economics and market trends, I can attest to the accuracy and reliability of the information provided in the article about gas prices. My extensive background in analyzing global energy markets, coupled with my in-depth knowledge of economic indicators, allows me to offer valuable insights into the factors influencing gas prices.
The article rightly points out that predicting future gas prices is a complex task due to various interconnected factors. The mention of the U.S. Energy Information Administration's predictions is noteworthy, as the EIA is a reputable source known for its comprehensive analysis of energy markets. The agency's forecast of lower gas prices, averaging $3.32 per gallon in 2023 and $3.09 per gallon in 2024, aligns with my own understanding of market dynamics.
The article appropriately highlights the uncertainty surrounding the U.S. economy in 2023, emphasizing the potential impact of global factors such as the war in Ukraine and shifts in China's COVID-19 policies. These geopolitical events indeed play a significant role in shaping energy markets and can lead to fluctuations in gas prices, a point that I have consistently emphasized in my own analyses.
Furthermore, the article accurately identifies the key factors influencing gas prices, including the cost of crude oil, refinery operations, marketing and distribution costs, and federal and state taxes. I would like to emphasize the critical role of crude oil prices, which directly affect the prices consumers see at the pump. Changes in global demand for gas and shifts in government policies, as mentioned in the article, are crucial elements that can impact the overall trajectory of gas prices.
The mention of industry executives' expectations of short-term increases in gas prices aligns with the seasonal trends observed in the energy market, particularly the rise in demand during the spring. This insightful observation reflects a deep understanding of the cyclical nature of gas prices, a characteristic that I have frequently emphasized in my own analyses.
In conclusion, the article provides a comprehensive overview of the factors influencing gas prices, drawing on reliable sources such as the U.S. Energy Information Administration. The inclusion of industry insights and acknowledgment of the unpredictable nature of the market contributes to a well-rounded analysis. It is crucial for consumers to stay informed about these factors to navigate the potential fluctuations in gas prices effectively.
