NEW YORK ( TheStreet) -- Memorial Day travelers can take solace that gasoline prices for 2013 likely peaked three months ago, and summer nomads shouldn't fret about a spike at the pumps.
The national average of regular retail gasoline sits at $3.67 a gallon, according to the Energy Information Administration, and is 4 cents cheaper than the same week a year ago.
Gas is about 11 cents lower than the 2013 peak for the week of Feb. 25.
"We may well have already peaked for gasoline season," said Matt Smith, commodity analyst at Summit Energy Services.The predominant driver for the price of gasoline is crude oil, Smith said, and while refinery capacity recently has dropped, inventories of gasoline and crude remain high. The protraction of a sluggish U.S. economy, which is growing at an annual rate of just 2.5% and has sustained a high 7.5% unemployment rate, suggests that vacationers will continue to cut back spending on long trips in the family automobile.
High inventories coupled with low demand suggests that prices at the pump are not poised to jump dramatically, in fact, some analysts said Americas could see regular gasoline at a discount by Labor Day. "Barring hurricane season and barring any major disruptions, the preponderance of that evidence suggests that we could see a dramatic drop in price later this summer," said Phil Flynn, an analyst at PFGBest. Though many analysts have forecast a slow summer driving season and softening retail gasoline prices, there is room for a surprise. Observers look to Memorial Day holiday travel as the weekend to set the tone for the rest of the season, and drivers could be the wild card. "Of course the wild card is going to be demand side, which has shown signs of getting a little bit better," said Addison Armstrong, senior director of market research at Tradition Energy.
A move lower in prices could encourage more demand, especially as auto enthusiasts realize that the current gallon of gas costs 4 cents less than the $3.715 a gallon against the same time a year ago. Future Memorial Day weekends could become more favorable for travelers. According to Flynn, if drivers can get through another couple of summers they will see gas prices really start to come down due to the increase in domestic production and the advent of more efficient energy sources. Smith, however, doesn't necessarily agree. He said that greater domestic oil production doesn't equate to lower gasoline prices. "We may well see lower prices in the years to come because we're seeing much less demand, and natural gas vehicles or hybrids," said Smith. "I agree that we may well see prices edge lower, but I don't think by any means we're going to be at $2.50 -- because if we are that means we're going to be at $70 a barrel."
July light sweet crude oil futures settled Thursday at $94.25 a barrel, while Brent crude continued to sit at more than $100 per barrel. Put into perspective, $2.50 gas would require crude to dive to levels not seen since the middle of the Great Recession. Consumers may want to keep an eye on Iran as the country holds elections on June 14. Reformist and former President Akbar Hasemi Rafsanjani was disqualified from running. Observers may remember the 2009 Iranian election that produced a disputed victory for incumbent President Mahmoud Ahmadinejad and a prolonged period of protests by the nation's citizens. Unrest in the region could stir worries in markets, but disruption among Iranians may not affect supply in the U.S. As for the 2013 Memorial Day weekend, consumers will have a few extra dollars in gas money to spend on a cold beverage. -- Written by Joe Deaux in New York. >Contact by Email. Follow @JoeDeaux