Memorial Day gas prices a buck lower than last year

Crude oil prices have fallen almost $45/bbl since last year, giving Memorial Day motorists a break at the pumps

Memorial Day drivers will be enjoying the lowest gasoline prices since 2009 and the American energy industry says consumers can thank fracking and the shale oil revolution.

Memorial Day

Source: Provided by GasBuddy.com.

On May 18, the U.S. average retail price for gasoline was $2.74 per gallon ($/gal), or 92¢ per gallon (¢/gal) lower than at the same time last year. This is the lowest average price heading into the Memorial Day weekend—the traditional start of the summer driving season—since 2009.

Lower gasoline prices reflect lower crude oil prices, with the spot price of North Sea Brent crude oil at more than $45 per barrel lower than the same time last year, despite having increased more than $10/b since the beginning of February.

“Thanks to hydraulic fracturing and horizontal drilling, the U.S. is experiencing a renaissance in domestic oil and natural gas production,” said John Felmy, chief economist for the American Petroleum Institute.

“The benefits for U.S. consumers – as well as manufacturers, the travel and tourism industry and frankly our entire economy – are hard to overstate.”

Average retail prices for all regions of the country are below the level at the same time last year, even in the West Coast Region, where supply disruptions pushed gasoline prices to $3.51/gal on May 18, 77¢/gal higher than the U.S. average. Average retail gasoline prices are lowest on the Gulf Coast (PADD 3), at $2.47/gal on May 18.

Memorial Day

On May 18, the U.S. average retail price for gasoline was $2.74 per gallon.

Gulf Coast gasoline prices are often lower than the U.S average, as the region is home to half of the U.S. refining capacity but a smaller share of gasoline demand.

In the May Short-Term Energy Outlook, EIA projects the U.S. monthly gasoline price to average $2.68/gal in May, and then decline as refineries in California resolve outages and refineries in the rest of the country increase production of gasoline. EIA projects regular gasoline retail prices to average $2.51/gal during the third quarter of 2015.

Felmy says government policymakers should not take lower gasoline prices for granted. Companies must be able to lease acreage and obtain permits in a timely fashion, and it also means the federal and state governments should avoid punitive tax regimes that would cause energy companies to look elsewhere for the best opportunities.

“In order to maintain a robust supply of domestic oil, it is essential that the industry be allowed to affordably and predictably explore for and develop new resources,” he said.

“Geopolitical turmoil that takes foreign oil supplies offline can be difficult to predict or control, but the U.S. will always have control over how much energy we produce here at home. With the right policies, our energy renaissance can endure for decades and help even more families afford to take a vacation on Memorial Day weekend.”

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