According to the U.S. Energy Information Administration, the national average price for gasoline heading into the 2017 Memorial Day weekend is $2.40 per gallon, up from last year's price of $2.30/gal. Despite the year-over-year increase, 2017 marks the second-lowest price since 2009, when the national average price of regular gasoline was $2.31/gal.
Relatively low crude oil spot prices, weaker year-over-year gasoline demand, and high gasoline inventories are all putting downward pressure on gasoline prices. The price of gasoline typically increases during spring due to the switch from winter-grade to more expensive summer-grade gas. This year, unlike many recent ones, prices have remained relatively stable as Memorial Day approaches.
Gasoline demand has fallen from last year, putting further downward pressure on prices. As of May 19, the four-week average U.S. demand is 178,000 barrels per day (b/d) - approximately two percent below 2016 levels. Despite declining demand in 2017 so far, AAA (in association with IHS Markit) expects over 39 million Americans to travel this weekend, 1 million more travelers than last year and the highest travel volume since 2005.
High inventories, including finished gasoline and gasoline blending components, are also contributing to the downward pressure on gasoline prices. Gasoline inventories have been averaging near 2016 levels (the upper end of the five-year range). This trend corresponds with strong refinery and blender net production of finished motor gasoline, which has been equal to or greater than 2016 4-week average levels for 10 straight weeks.
Through May 22, U.S. regular gasoline prices, as measured in EIA's weekly retail survey, have averaged $2.36/gal in 2017. EIA expects the 2017 summer season (April through September) gasoline price to average $2.39/gal, 16 cents higher than last summer. U.S. regular gasoline prices are forecast to average $2.34/gal in 2017 and $2.45/gal in 2018.