GRAND RAPIDS, Mich. (WOOD) — Drivers, get ready to pay more at the pump this year.
The analysts at GasBuddy.com released their gas price forecast for 2018 on Wednesday.
“The way we come up with this is to analyze several factors, probably dozens of factors, that are impacting oil prices from economic, supply and demand are certainly big causes,” GasBuddy senior petroleum analyst Patrick DeHaan told 24 Hour News 8 via Skype Wednesday. “Policy is a big one. And that’s probably the biggest reason that gas prices are higher this year: policy, OPEC’s policy. You’ll have to remember back in 2016, OPEC decided to cut oil production in late November, and it’s that policy change that’s caused U.S. oil inventories to decline by 54 million barrels, pushing oil prices up to today to the highest level since 2015. And that is why gas prices are likely to be more expensive in the year ahead.”
GasBuddy emphasized its forecast is based on what could happen with supply and demand with some volatility factored in, but it cannot anticipate every event that can impact gas prices, like Hurricane Harvey did in 2017.
BEST MONTHS TO FILL UP
Drivers looking for the best deals on regular gas should fill up now. GasBuddy expects regular gas prices nationwide to average to about $2.41 per gallon in January, climbing to $2.59 per gallon in March.
>>Inside woodtv.com: Map of current gas prices
However, drivers who use diesel will likely see the lowest national prices in July, at $2.59 per gallon, and the highest in January and December, at $2.86 and $2.84 per gallon, respectively.
GREAT LAKES REGION VS. NATIONAL AVERAGE
GasBuddy expects prices at the pump nationwide to average out to about $2.57 per gallon of regular gas and $2.70 per gallon of diesel throughout the year. Analysts anticipate regular gas prices to peak in May, with most gas stations charging $2.57 to $2.88 per gallon.
>>PDF: GasBuddy 2018 price forecast
However, GasBuddy points out that the Great Lakes region is “susceptible to severe price spikes” because the area relies on a few dominant refineries.
“I think the second-largest factor (in what we pay at the pump) comes down to refining that crude oil,” DeHaan told 24 Hour News 8. “So many times, we’ve talked about refineries this, that, unexpected issues, because without refineries, there’s no gasoline. So I think the problem, especially this time of year with the cold weather that we’re having, is that we’re subject to refining capacity: Are there enough refineries? Will they be able to churn out enough gasoline? And that’s why we can have some volatility, especially in the Great Lakes, where we’re not next to, say, the ocean, where gasoline can be supplied via barge. So there’s limited ability for our refineries because we’re essentially landlocked, and that’s why so many we’re times talking about refineries going up or down because of unexpected issues or because supply is very high.”
Those unexpected problem can often happen as refineries switch from “winter blend” to “summer blend.” Gas prices traditionally rise when refineries switch their gasoline blend as part of federal environmental regulations, which GasBuddy says can impact prices by $0.25 to $0.75 per gallon.
When it comes to major U.S. cities, gas prices in Detroit should also stay under the $3 mark this year, based on GasBuddy’s estimates. The company anticipates regular prices in Motor City to peak between $2.75 and $2.95 per gallon.
HOW IT WILL HIT YOUR WALLET
In 2018, GasBuddy anticipates the average U.S. household will spend $1,898 on gasoline, up $133 from the year prior.
The company says its definition of a household is based on U.S. Census Bureau numbers, which say the average U.S. household contains 1.8 vehicles and 2.53 people.
“Motorists probably won’t be getting pumped up to pay more at the pump this year, but should find some solace in knowing we won’t come anywhere near record prices this year while most of the country will continue to see plenty of prices in the $2 per gallon range,” DeHaan stated in the 21-page report.