Gas prices are currently the lowest they’ve been in over two years, and drivers should expect those prices to get even lower next year, according to a new report by GasBuddy, which tracks gas prices across the U.S.
As of Thursday afternoon, the average price for gas in the Chicago metropolitan area was $3.17 per gallon, according to GasBuddy. The average price in the U.S. was $3.10 per gallon.
Average gas prices on both a national and local level haven’t been this low since 2021.
That’s contrasted to just last summer, when drivers in the Chicago area were paying an average of $5.03 per gallon to fill up their tanks.
What is Causing the Overall Decline in Gas Prices Now?
Many factors contribute to gas prices. Some of what we’re seeing now is due to the season.
Americans don’t drive as much in the colder weather, meaning there’s less demand for gas, which causes the price to go down, according to Molly Hart, a spokesperson for the American Automobile Association.
In the bigger picture, the falling gas prices over the past two years have to do with the easing of factors like the COVID-19 pandemic and the Russia-Ukraine war that contributed to higher prices, said Patrick De Haan, head of petroleum analysis at GasBuddy.
“As we approach the second year of Russia’s war in Ukraine, the oil supply has not been affected in a way that was initially feared,” De Haan said. “And, as we have continued to see the economy normalize after a surge in consumption and the economy reopened after COVID, essentially, the shockwaves that persisted after these events have really been subdued over the last year.”
What’s Ahead for Gas Prices in 2024?
After two years of above-average gas prices, next year is expected to bring relief at the pump for drivers, according to GasBuddy’s annual fuel price outlook report released Thursday.
The company expects the yearly national average to drop from $3.51 per gallon this year to $3.38 in 2024.
Memorial Day is expected to be the priciest holiday for Americans at the pump next year. In Chicago, the highest daily average for gas prices next year is expected to be between $4.30 and $4.85 per gallon, the report said.
Alongside gas prices, diesel prices are also expected to decrease next year, which could be significant in the broader economic picture, according to De Haan.
“That is a major fuel used to get goods and commerce from point A to point B,” De Haan said. “If diesel prices remain lower, that could help lead to continued disinflation for consumers.”
The report also noted an elevated level of uncertainty that remains amid ongoing global conflicts and the state of the U.S. economy, which can make an accurate forecast challenging.
“If there’s a dramatic escalation in the situation between Israel and Hamas, that could present a wildcard that causes a different future for the price of gasoline in the air,” De Haan said.
Other possible factors affecting gas prices could include refinery outages, fiscal policy by central banks on inflation, and policy by the Organization of the Petroleum Exporting Countries, or OPEC.