Gas prices headed lower

The Energy Department and AAA predict a drop this year, but they don't account for variables like storms or wars.

By Jason Notte Jan 14, 2013 9:27AM

Filling fuel tank -- CorbisFor perhaps the first time since the fiscal cliff debates began, the government has come up with an item whose price won't increase in 2013: gasoline.

Thanks to high supply and weakened demand, the average price per gallon should fall to 5% to $3.44, according to the Energy Department. That's still well above the dreaded $3-a-gallon mark and the third highest average fuel price ever, but it's 19 cents lower than last year's record $3.63 average.

It's also an average savings of $205 per household in 2013, which theoretically could put $25 billion back into other areas of the economy -- or, you know, into Americans' savings. That's assuming the Middle East doesn't flare up again, the hurricane season doesn't yield another Superstorm Sandy and the nation's refineries stay open and keep running at capacity.

It also ignores the expiration of last year's payroll tax deduction, which increases the Social Security levy from 4% to 6% this year and will cost households making $40,000 to $50,000 an extra $600 in 2013, according to the Tax Policy Center. Also, the Energy Department's recent history with this kind of prognostication has been spotty at best. In 2011, it predicted average gas prices around $3 just before Libya's revolution halted oil production and drove the national average to $3.53. Last year's prediction was $3.45, which also fell more than a little bit outside the mark.

AAA is steering away from the government annual average and, instead, is focusing on upcoming fluctuations in fuel prices. While AAA's average U.S. gas price sits at $3.31 per gallon, the motorist organization predicts that price could go as high as $3.80 this spring before dropping to $3.20 in mid-summer. That would be the lowest average gas price Americans have paid since February 2011, but may be short-lived depending on what hurricane season brings.

Of course, those prices are also still highly contingent upon where drivers live. Right now, drivers in Utah have the lowest gas prices at an average $2.88 a gallon, while New Yorkers are still dealing with Sandy's aftermath as they pay $3.75. One region's year of cheap gas could be another area's fuel crisis.

More on Money Now

Feb 2, 2013 8:31AM
income taxes are always higher than payroll taxes. think in terms of zero payroll tax. income taxes would be higher and ss trust fund is zero.
Jan 15, 2013 1:20PM
Gas is $2.86 here in southern Missouri.
Jan 15, 2013 7:57AM
Jan 14, 2013 8:03PM
Every year all they do is shoot the price of gas through the stratosphere then let it down to cloud level and tell everyone how good it is. If you charge $5a gallon then lower it to $3.75 a gallon Your not getting any kind of deal if it should really only be $2 a gallon. I dont know if Im more insulted that they think were all dumb enough to believe the trash they tell us or more insulted by the fact that their not smart enough to come up with better lies..To be torn on such an issue.. lol
Jan 14, 2013 8:03PM

when where and how will someone please explain that to me?


Jan 14, 2013 8:01PM
Yet I think last week on here they said prices were gonna go way up !?!
Jan 14, 2013 7:51PM
You liberals have it all wrong. There are several factors why fuel is high. The very first thing you must learn about oil is every single gallon that comes out of the ground is sold. How many businesses can say that no matter how much they produce, every unit is sold. Once you come to terms with that simple fact the rest is easy to explain. You keep demonizing Big Oil and others for every reason under the sun. Yet Big Government taxes oil four to five times as much as the profit Oil companies make. Government does not drill for it, refine it, ship it, or pump it. Government taxes it and still Big Oil is blamed for high prices. 

As far as companies storing oil and speculating that prices will go up and say it's wrong would have to admit its wrong for individuals to buy stock in anything and speculate that what you buy is going up in the future. What's good for the Goose is good for the Gander. 

The list of reasons go on and on but it's not the fault of Big Oil. 
Jan 14, 2013 7:31PM
Gas is in the low $3 dollar range right now. Six months from now, they will shoot up to the $6 dollar range, and everyone will cry, whine, but pay, and the gas companies will lower the prices about a dollar, and everyone will be thrilled that they are in the 4 to 5 dollar range. Its a shame that everyone is too busy to be like our european couterparts, and really show their displeasure.
Jan 14, 2013 7:30PM
Jan 14, 2013 7:11PM

"It's all b - - - s - - -, and it's bad fer ya "- - - - - George Carlin !

Jan 14, 2013 6:46PM

the lower the price goes the more people waste it

Jan 14, 2013 6:20PM
you people  make me laff you complain about gas prices health care etc when it all comes down to capitalism----- get rid of capitalism problem solved
Jan 14, 2013 6:16PM
I won't be impressed till ga**** $1.99 a gallon.  Till then, it's still too high.
Jan 14, 2013 6:15PM
ban oil futures trading online period it should be done through a broker and place a restriction on who should by oil stocks if they aren't american then they cant buy oil or commodies stocks and they can only use a american broker then you'd see the prices go down at the pumps
Jan 14, 2013 6:11PM
$2.82 in Tucson this past weekend.
Jan 14, 2013 6:05PM

I remember paying .25 cents per gallon, and bread was not much more per loaf




Blame speculators for high gas prices! Why can't the government just make it illegal?

Why can't the government make speculation illegal (or at least regulate it back to sanity)? Simple answer! GOPCon.

Jan 14, 2013 5:46PM

This is Barry Obama's no-growth economy.  The price of gasoline will drop due to a lack of demand for the supply so we will continue to export petrol products like never before.


mmm, mmm, mmm.  Just print mo' money - and, welcome to Obamaville.

Jan 14, 2013 5:46PM
Oil futures are not traded on a transparent market.
Jan 14, 2013 5:20PM
I remember a short while back a saying "Drill baby drill"  We are currently the largest producer of oil in the world.  So much for it lowering prices as some suggested in a political party not to be mentioned!!!!
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