Prices at the pump this Memorial Day weekend are among the cheapest in years, thanks to low oil prices and near-record-high refining volumes.
The national average for unleaded regular gasoline Friday was $2.37 per gallon, 6 cents higher than last year, according to AAA. However, prices are well below the five preceding years, when prices averaged above $3 per gallon on Memorial Day weekend. Part of this year's rise includes several cents per gallon from increased state gasoline taxes.
"I think there will be a lot of price points at various places in the country below $2. We're always going to be making more gasoline than we need. It's only when we get disruptions that you get issues," said Tom Kloza, head of global head of energy analysis at the Oil Price Information Service.
The perfect storm for cheaper gasoline prices, however, has been due in part to record runs at U.S. refineries. U.S. refiners processed 17.3 million barrels of crude last week, the second highest ever after a slightly elevated run in April. According to government data going back to 1982, the first time more than 17 million barrels a day was processed by the industry was in January.
"The consumer is reaping the benefit. I think the national average [for gasoline] will still range between $2.40 and $2.50 a gallon, and any price increase is going to be tempered by rising U.S. crude oil production, which is set to hit an all-time record in 2018. The record being just shy of 10 million barrels a day," said Andrew Lipow, president of Lipow Oil Associates.
Kloza, who had initially forecast a much higher gasoline price for this summer, said his outlook was proven wrong because oil did not rise above $55 as he expected. Even after OPEC reached an agreement to extend production cuts Thursday, crude prices fell and West Texas Intermediate futures were just below $50 per barrel in Friday trading.