Despite this week's increase in regular-grade gasoline prices to an average of $3.29 per gallon, the price of gasoline is lower than three months ago, 14 cents less than a year ago, and the lowest heading into a Thanksgiving holiday since 2010. Traditionally, the Thanksgiving holiday accounts for the most heavily traveled part of the year in the United States. AAA estimates that during this 2013 Thanksgiving holiday weekend (Nov. 27-Dec. 1), more than 38 million people in the United States will travel more than 50 miles from home by automobile.
Gasoline prices vary by region and reflect differences in gasoline blends, taxes, and unique regional characteristics. West Coast prices typically exceed the U.S. average because of stricter fuel specifications in California and the region's relative isolation from other domestic markets. Higher prices in different areas of the East Coast can be attributed to varying taxes in each state.
Gulf Coast refiners produce 2.5 times more gasoline than is consumed within the region. Combined with lower state and regional taxes on gasoline, this supply abundance results in prices that are usually lower than the national average. Prices in the Gulf Coast registered a brief dip below the $3.00 mark on November 11, the first time since February 2011.
EIA's November 2013 Short-Term Energy Outlook (STEO) forecasts the U.S. average retail price of regular gasoline to be $3.24 per gallon in fourth-quarter 2013, rising early next year to average $3.33 per gallon in first-quarter 2014. The November STEO also forecasts the 2013 annual average retail price for a gallon of regular gasoline at $3.50 and the 2014 average at $3.39.
Lower costs of crude oil are the major reason that gasoline prices are down in recent months. Spot prices for Brent crude oil dropped by $4.66 per barrel from September 3 to November 25. West Texas Intermediate (WTI) crude oil, which has a much smaller role in driving gasoline prices, fell by $14.81 per barrel over the same period. The decline in crude oil prices was partly driven by lower demand for crude oil due to seasonal refinery maintenance. EIA's November 2013 STEO forecasts Brent and WTI prices to decline further to $105 and less than $94 per barrel, respectively, in December, and down to $101 and $93 by the end of 2014.
Principal Contributor: T. Mason Hamilton