American drivers can expect lower motor fuel costs for a second-straight year in 2024 as a jump in global refining capacity and a surplus in U.S. gasoline stocks drive down retail prices, according to analysts’ forecasts.
The U.S. national average retail gasoline price could drop by 13 cents next year to $3.38 a gallon, according to price tracker GasBuddy.com’s annual outlook.
The U.S. Energy Information Administration is expecting a bigger, 17-cent drop in next year’s average pump price, according to its latest short-term forecast.
Lower gasoline bills free up money for consumers to spend elsewhere and could help the U.S. avoid a recession next year. The national average price of gasoline crossed $5 a gallon for the first time in June 2022, lifting inflation to a 40-year record.
Lower gasoline prices helped push U.S. consumer confidence to a five-month high in December, prompting many consumers to plan purchases of motor vehicles, houses and major appliances over the next six months, according to a report this month by the think-tank Conference Board.
“Gas prices really highlight how Americans feel about the economy. It is the one commodity that everyone knows the price for whether they need it or not,” GasBuddy analyst Patrick De Haan said.
U.S. fuel stocks have built rapidly since mid-November, with refiners adding over 10 million barrels of gasoline to storage since Nov. 17, according to EIA data.
In the U.S. Midwest, gasoline inventories are at their highest level since April 2022, while refinery utilization in that region climbed to its highest level on record last week, the EIA said on Thursday.
“U.S. gasoline inventories are now higher than this time last year, which we expect to be true in January 2024 as well,” the EIA said earlier this month.
At the same time, more than 1 million barrel per day of new refining capacity is set to come online this year in China, India, Mexico, the Middle East and Nigeria.
“The global refining picture continues to improve, providing more capacity and peace of mind that record-setting prices will stay away from the pump this year,” De Haan said.
(Reporting by Shariq Khan; Editing by Stephen Coates)