NEW YORK (MainStreet) — Saudi Arabia and other oil-exporting nations are about to make your summer vacation a lot more fun by keeping gas prices at their lowest May-to-September levels in at least six years.
"The savings are going to be a big boon," says Patrick DeHaan of market tracker GasBuddy.com, which predicts U.S. pump prices will average around $2.40 to $2.65 a gallon from Memorial Day to Labor Day.
That will be lowest summertime level since at least 2009, when gas averaged $2.57 a gallon. And if prices remain near the bottom of GasBuddy's forecast, Americans will pay the smallest summer fuel charges since 2005, when gasoline averaged $2.33 a gallon during the May-to-September period.
Low summer pump prices are good news for the economy, as Americans do the most driving during warm-weather months.
DeHaan says a roughly $1-a-gallon drop in prices since last summer will put about $400 million extra in Americans' pockets every day in coming months.
AAA estimates lower fuel prices have already saved consumers $50 billion this year — or $400 per household — with the good times to only continue during the summer-driving season. The auto club's own summer forecast closely mirrors GasBuddy's, with AAA predicting pump prices will average around $2.50 to $2.75 a gallon nationwide during the next few months.
Club spokesman Michael Green says low gas prices are part of the reason that AAA forecasts some 33 million Americans will drive to destinations at least 50 miles from home this Memorial Day weekend. That's a 5.3% increase from 2014.
"It's clear that many Americans are using their gas savings to travel this year," Green says.
DeHaan says pump prices are way down due to a combination of higher U.S. shale-oil output and moves by Saudi Arabia and other Organization of Petroleum Exporting Countries countries to undersell their American rivals.
"The Saudis woke up one morning in early October and started to say that they were essentially looking to win market share back from the United States by offering discounts on oil," the expert says.
Although Saudi Arabia has somewhat backed off of that position, The Wall Street Journal reported this week that OPEC expects oil to rise no higher than around $76 a barrel over the next 10 years from roughly $61 today. That would keep consumers' fuel costs at around $3.31 a gallon or less if the current relationship between wholesale-oil prices and retail-gas charges holds.
Average gas costs have been generally falling for almost a year since hitting the current cycle's peak of $3.68 a gallon last June. Prices bottomed out at $2.03 a gallon on Jan. 26, but have partly rebounded since then to average $2.66 as of earlier this week.
Still, fuel costs are well below both their June 2014 highs and the all-time record of $4.10 a gallon that they reached in July 2008.
DeHaan says the modest prices should particularly help lower-paid Americans afford auto-oriented vacations this summer.
"Well-to-do travelers go where they want to go regardless of fuel prices, but the real different will be with paycheck-to-paycheck workers," he says. "With average earnings up and gas prices at their lowest levels since at least 2009, even the folks that aren't making the most income will be able to take some time off and hit the road."
— Written by Jerry Kronenberg for MainStreet