Looking for an excuse to pack up the car for a road trip this weekend?
Look no further: The average nationwide gasoline price on Friday was the lowest for this point of the year since 2005, according to GasBuddy, a website and smartphone app designed to help drivers find the best deals at the pump.
The immediate cause of the price break was the shock to global oil markets that came when the Energy Department reported this week that domestic inventories of both crude oil and gasoline had surprisingly surged the week before despite heavy driving on the Memorial Day weekend.
Crude oil prices plummeted by more than 5 percent on Wednesday alone, and are near a one-year low at less than $46 a barrel.
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The price drop has been all the more remarkable given that the Organization of the Petroleum Exporting Countries has imposed a production cut since the start of the year, and Saudi Arabia and its allies cut off relations with Qatar this week, threatening the kind of heightened tensions in the Middle East that normally push energy prices higher.
But whatever lies behind the dividend at the pump, drivers are happy to have it. The national average price for a gallon of regular gasoline tumbled to $2.35 on Friday, a drop of 3 cents in the past week and more than 2 cents below last year at this time, according to AAA. And Friday was the first time this year that prices were lower than a year earlier.
Among the beneficiaries was Charlene Kotlarsic of Garfield Heights, Ohio, who was filling up her 2016 Kia Sorento in the Cleveland suburbs for $2.21 a gallon. She expects to take advantage of the lower prices for a road trip to Myrtle Beach, S.C., in July. "I probably wouldn't have planned it if gas prices were $3 and above," she said.
Ohio drivers are among those most likely to notice the impact. Of the 23 states where prices are lower than a year ago, a cluster of states — Ohio, Illinois, Indiana, Kentucky, Michigan and Wisconsin — are seeing the biggest declines. Indiana drivers are paying 28 cents a gallon less on average than last year, meaning a driver can save around $5 in filling up a midsize car.
Most energy experts say the break in gasoline prices may last only a few weeks, because stronger seasonal demand will soon draw down refinery storage levels. And if oil prices stay low, that would depress new production, which could eventually push prices higher.
"Drivers should be very happy because all prognosticators overestimated what they would be paying," said Tom Kloza, global head of energy analysis for the Oil Price Information Service. "This is a slump, a buying opportunity, and Americans can enjoy it. But I think it is a little bit of an anomaly, and I expect to see higher crude oil prices in the second half of the year."
The recent lows become more stark in comparison to mid-2008, when the American oil benchmark hit $145 a barrel and the average price of gasoline hit a record of $4.11 a gallon, according to AAA. Economists credit the slide with helping to keep inflation and interest rates low, and benefiting low-income consumers who spend the most money on energy relative to their incomes.
Tom Sech, a real estate agent from Independence, Ohio, who drives a nine-year-old compact sport-utility vehicle, likes to make trips to his lakeside cottage in Chautauqua, N.Y. "I can go more often because gas is cheaper," he said.
Americans consume roughly 400 million gallons of gasoline a day, so every penny decline means around $4 million a day to American consumers.
Prices at the pump are determined by a variety of factors, including consumer demand, domestic storage levels and OPEC production decisions. And there are great regional variations, reflecting differences in refinery operations as well as state taxes.
The average driver in South Carolina could fill up for $2.02 a gallon on Friday, compared with $3.06 in California and Hawaii, according to AAA. The Western states are seeing the biggest increases from last year, because of rising demand by drivers and unplanned maintenance of local refineries. Drivers in New Jersey are paying 23 cents a gallon more than a year ago because of an increase in gasoline taxes.
There was strong American consumption growth in 2015 and 2016, due in large part to the collapse of oil and gasoline prices. But with winter oil and gasoline prices considerably higher this year than last, motorists drove a bit less and domestic oil companies ramped up production to take advantage of higher crude prices. That produced a glut, with refineries able to pull stocks from storage rather than buy more expensive, new crude.
American oil production, after a two-year slump, is soaring again, with the active drilling rig count more than doubling since May 2016. The Energy Department recently predicted that domestic oil production, which averaged 8.6 million barrels a day in 2016, will average 9.3 million barrels a day this year and 10 million barrels a day in 2018, blowing past the record set in 1970. The bulk of the new production is coming from the shale fields of Texas.
"It's an unbelievable ramp-up considering that the price of a barrel of oil has not increased significantly," said Matthew Hale, chief executive of S.O.C. Industries, a pump truck and production chemical services company that operates in the West Texas oil fields. "The activity level has really boomed, and with technological advances, the increase in the number of barrels we're getting out of each well is pretty amazing to watch."
The expanded United States production has canceled out much of the reduction in OPEC output, now more a million barrels a day below last year. While Russia and some other producers besides OPEC have also cut production, Brazil and Canada are among those producing more. Nevertheless, the Energy Department is predicting that global oil inventories will fall in the second half of the year.
The Energy Department recently forecast an average regular gasoline retail price of $2.46 a gallon during this summer driving season, 23 cents higher than last summer. But experts say predictions are unreliable, given that demand from China and other developing countries frequently varies because of changing economic and political circumstances. Also, Venezuela, a top source of imported oil, might collapse at any time, and hurricanes can suddenly shut down Gulf refineries.
In short, don't get used to filling the tank for less. Or take advantage while you can.
"Forecasting the price of gasoline is an art form, not a science," said Larry Goldstein, a director at the Energy Policy Research Foundation, which studies energy economics. "There are simply too many variables. The best you could hope for is a range of plus or minus 10 cents a gallon."