The price of oil has surged, which has pushed the market higher, and generated a healthy wealth effect for those who have equity exposure. And now it's time for the hangover. As GasBuddy warns in its 2017 Fuel Price Outlook, motorists are about get some sticker shock in 2017 and will shell out $52 billion more over the course of the year compared to 2016 as the national yearly average rises to $2.49 per gallon.
Aside from gasoline prices that are forecast to be higher than 2016, highlights include:
- $355 billion will be spent on gasoline in the U.S. over the course of the year, $52 billion more than last year. That’s a considerable jump given that motorists saved $39 billion on gasoline in 2016 versus 2015.
- The seasonal switch from ‘winter-blend’ to ‘summer-blend’ as mandated by EPA and the Clean Air Act will bring a spike at the pump later this winter and spring, with the national average gas price rising between 35-60 cents between mid-February and a peak, likely to occur in May.
- $3 a gallon gasoline will be seen in at least the nation’s largest cities: Los Angeles, New York, Chicago, Washington, D.C. and Seattle, with a strong possibility of such prices also appearing in a majority of the nation’s twenty largest metros.
“The list of factors being mixed into the yearly forecast has never been larger. This year will see a new administration take over, perhaps the most oil-friendly in some time, and with so many unknowns in regards to policy changes, we’ll be keeping a keen eye on such along with taxation changes. But forecasting fuel prices, especially this year, remains a challenging balance of science and art,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.
Additional components that have the potential to weigh on retail gasoline prices include federal and/or state tax changes, Middle East volatility, currency fluctuations, refinery maintenance and/or unscheduled outages, weather events, and shipping/transportation snafus.
“In recent years the ‘price at the pump’ continues to garner more media attention serving as an economic barometer on Main Street that stirs opinions from a broad swath of consumers from coast to coast,” said Gregg Laskoski, senior petroleum analyst. “Forecasting the direction of that ‘barometer’, the potential trouble-spots and how the trends are likely to translate into dollars and cents affords us the opportunity to share insights that help everyone save money, even when prices are climbing.”
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Remember when Janet Yellen, and all the tenured economists in her circles said that plunging gas prices are great for the consumer? Well, we are about to find out just how bad for the consumer rising prices will be.