National and Maryland gas price averages expected to be a quarter a gallon cheaper than during summer.
TOWSON, MD (Wednesday, August 29, 2018) – AAA forecasts that the national gas price average will drop to $2.70 per gallon this fall and has the potential to drop even more. That is 14 cents less a gallon compared to Tuesday’s price of $2.84 and more than a quarter cheaper than this year’s recorded high of $2.97 per gallon set in May.
Maryland’s average price will likely drop slightly below $2.70 per gallon, as Maryland’s average price typically trails the national average by a few pennies. As of Tuesday, August 28, the state average was $2.79 per gallon, after reaching a 2018 high of $2.99 per gallon during Memorial Day weekend.
“Relatively stable crude oil prices in August and cheaper-to-produce gasoline in September, along with an anticipated drop in consumer gasoline demand post-Labor Day, means consumers should see savings when they fill-up at the pump this fall,” said Christine Delise, Senior Public Affairs Specialist at AAA Mid-Atlantic. “However, several outliers can reverse this forecast, including crude oil prices, geopolitical tensions and the mere threat of a hurricane.”
Gas prices for 2018 have been significantly more expensive than 2017. In fact, the year-to-date-national gas price average through August 28 ($2.71) is 41 cents more expensive than the same time period in 2017, while Maryland’s average ($2.72) reflects an increase of 40 cents.
In Frederick the average price of a gallon of regular unleaded is $2.78.
In addition, the arrival of fall historically means a drop in consumer gasoline demand as summer road trips and vacations subside.
Crude Market Volatility: Much of 2018 has brought volatility to the domestic and global crude markets, as market watchers try to glean insight into forces that will shape global supply this fall. These forces include:
- Venezuela is a major crude producer for the Western Hemisphere, but its collapsing economy could halt its crude production.
- Organization of Petroleum Exporting Countries (OPEC) announced an increase in production over the summer, but slower-than-expected production growth could contribute to higher crude prices during the second half of the year.
- Geopolitical uncertainty in the Middle East and around the globe could disrupt vital crude flows.
- Iran Sanctions: When President Trump announced that the U.S. would withdraw from the Iran Nuclear Deal in May, the decision sent the crude markets into upheaval. In August, the first round of re-imposed sanctions on the country, which target Iran’s financial sector, went into effect and led to a brief uptick in crude prices.
The next round of sanctions, currently scheduled to take effect in November, will target Iran’s energy sector – including its crude exports – and will likely have a more sustained impact on crude prices. If and when those sanctions take effect, crude prices will likely surge over an expected reduction in Iranian crude exports and increased tension in the region that could destabilize global crude flows.
- Updated Hurricane Forecast: The National Oceanic and Atmospheric Administration’s Climate Prediction Center predicts a total of 9–13 named storms (winds of 39 mph or greater of which 4-7 will become hurricanes) including up to two major hurricanes (winds of 111 mph or greater). An average six-month hurricane season produces 12 named storms, of which six becomes hurricanes, including three major hurricanes. The mere threat of a hurricane in the U.S. would cause pump prices to spike, likely regionally, due to constrained supply and delivery challenges.