An estimated 93.6 million Americans are expected to take a road trip during the 11-day period from Dec. 23 through Jan. 2. Yet, despite the elevated demand for gasoline, prices at the pump remained unchanged throughout the Christmas weekend.
“Gas prices haven’t moved in about 10 days, because oil prices have stabilized, and the southeastern states are well supplied with gasoline,” said Mark Jenkins, spokesman for AAA. “Motorists should expect more of the same through the New Year, unless oil prices rise this week.”
Gas prices on Christmas Day were the highest in two years. The average price on Dec, 25 was $2.32 in Florida, $2.19 in Georgia and $2.09 in Tennessee. The prices were more than last year’s holiday averages by 31 cents in Florida, 27 cents in Georgia and 32 cents in Tennessee.
Heading into 2017, gasoline demand is expected to drop drastically during January following the busy holiday travel season. In the past five years, the average drop during that period has been 358,000 barrels per day or about 15 million gallons, according to OPIS. The oil information service estimates a larger dip this year. However, oil prices are about $20 higher than this time last year, which if unchanged, would prevent pump prices from falling 10-20 cents like they did during January 2016.
AAA estimates U.S. drivers have saved about $27 billion at the pump so far this year compared to the same period last year. The national average price for a gallon of gasoline was $2.29 Sunday, 29 cents more than the average price on New Year’s Day in 2016 at $2. Also Jan. 1, 2016, gas prices averaged $2 in Florida, $1.90 in Georgia and $1.75 in Tennessee. Most U.S. drivers are expected to pay the second-cheapest New Year’s Day gas prices since 2009, when the national average was $1.62, and prices averaged $1.64 in Florida, $1.51 in Georgia and $1.47 in Tennessee.
To start off the New Year, all eyes will be on OPEC to see if they, along with partnering countries, will stick to a six-month promise to cut 1.8-million barrels per day of crude per day. OPIS projects member compliance will likely be around about 70 percent, with expectations that Saudi Arabia, Kuwait, the United Arab Emirates and other Arab Gulf countries will stick to the deal while Libya and Nigeria could potentially increase their production output if conflict in both countries continues.
Last month, the Organization of Petroleum Exporting Counties, along with non-cartel countries, worked out an agreement to limit crude oil production by 1.8 million barrels per day beginning in January. Efforts to curb oil production are aimed at re-balancing global supply and as a result, markets have reacted, causing retail prices to increase.
Last week, Libya announced the re-opening of pipelines from two major oil fields, which has led many to speculate that increased production in Libya may counter OPEC’s anticipated cuts. Traders will pay close attention to Libya’s efforts and monitor OPEC’s ability to implement production cuts starting in January. If oil prices decline, gas prices will follow. At the close of Friday’s formal trading session on the New York Mercantile Exchange, West Texas Intermediate crude oil was up seven cents to settle at $53.02 per barrel – $1.12 more than the week before.