Not so happy new year: Expect to pay more for gasoline in 2018

The rising price of crude oil is putting upward pressure on gasoline prices and GasBuddy predicts motorists will pay about 18 cents more per gallon in 2018.

San Diego Union-Tribune

Jan. 3, 2018 2:10 PM PT

You’ll have to dig a little bit deeper into your pocket at the gas station this year.

The average price of a gallon of regular gasoline is expected to go up about 19 cents in 2018, according to the annual Fuel Price Outlook put out by GasBuddy, a tech company based in Boston that helps motorists find the cheapest gasoline in a given area.

The average price in the U.S. is projected to go from $2.39 a gallon to $2.57 a gallon, the highest price since 2014.

The increase will hit California drivers harder, since the average price for gasoline in the Golden State is higher (about $3.10 a gallon), due to higher taxes and the special blending requirements for fuel that are aimed at reducing air pollution.

“We won’t see record gas prices but we have seen an increase over the last few years,” said Patrick DeHaan, head of petroleum analysis at GasBuddy.

As recently as July 2014 gasoline in California topped $4 a gallon, largely because the price of crude oil exceeded $100 a barrel.

The OPEC connection

Oil prices crashed to below $30 a barrel in February 2016 but have slowly increased since then and DeHaan points to the Organization of Petroleum Exporting Countries (OPEC) as the big reason why.

OPEC has reduced production in order to boost prices and, unlike in the past, its members have stuck to their pledges for the most part.

“The old way of thinking was all you could be sure of in life was taxes, death and OPEC cheating on production quotas, so that was a big surprise,” DeHaan said.

Oil inventories in the U.S. started the new year 54 million barrels lower than where they started in 2017, DeHaan said.

The price of Brent crude — the generally accepted international price — has climbed to $67 a barrel and West Texas Intermediate — the domestic benchmark price — is up to $61 a barrel, cracking the $60 mark for the first time since June 2015.

U.S. shale producers may jump in to try to replace the production void and put some downward pressure on prices, DeHaan said, but for now the anticipation is for gas prices moving higher this year.

Political problems in Iran and and continued economic catastrophe in Venezuela also pose the possibility of constraints on global production.

Higher prices come just two months after the price at the pump in California went up 12 cents per gallon, due to the implementation of the gas tax, passed last year by the Legislature and signed into law by Gov. Jerry Brown.

Money from the Road Repair and Accountability Act is earmarked to fix the state’s highways, bridges and transportation infrastructure.

A second iteration of the tax goes into effect in 2019 and will increase the price per gallon an additional 5.6 cents.

Former San Diego City Council member Carl DeMaio is leading an effort to repeal the tax and is trying to gather 585,407 signatures from registered voters by March to put the initiative on the November ballot.

You better shop around

DeHaan said San Diego drivers can lessen the blow by looking for gas stations that offer cheaper prices.

Motorists who drive 15,000 miles a year in cars getting 25 miles per gallon will pump 600 gallons into their vehicles. That comes to about $2,000 a year in fuel costs.

“Over the course of the year, you could end up saving a couple hundred bucks, easy, just by shopping around and that’s what we suggest people do,” DeHaan said.

The price spread between one gas station and another can be dramatic.

DeHaan went to his computer and quickly looked at five stations within a half-mile of each other in the Studio City area of Los Angeles. One station charged as much as $3.99 a gallon and another offered gas at $2.89 — a $1.10 difference per gallon.

“There are a lot of communities, especially the bigger cities where a lot of us live, that have this wild spread,” DeHaan said. “Just get into the habit of downloading an app and shopping around.”

GasBuddy estimates the highest daily average gas price for San Diego hovers between $3.20 a gallon and $3.60, although some stations charge even more.

The range in San Diego is lower than Los Angeles and San Francisco but not as cheap as Sacramento.

Highest Daily Average Gas Price

Atlanta $2.55-$2.75

Chicago $2.95-$3.35

Dallas/Ft. Worth $2.45-$2.70

Denver $2.55-$2.80

Houston $2.35-$2.65

Los Angeles $3.25-$3.65

New York City $2.75-$3.15

Phoenix $2.45-$2.75

Sacramento $2.95-$3.45

San Diego $3.20-$3.60