GasBuddy Predicts 2014 Gas-Price Rollercoaster Ride

Published in CSP Daily News

Outlook sees potential for dramatic spikes, equally dramatic plunges

BROOKLYN PARK, Minn. -- Retail gasoline prices will peak at $3.83 gallon this spring, according to fuel price website GasBuddy.com.

U.S. gasoline prices will see huge swings and regional volatility in 2014, but GasBuddy analysis suggests that when the final figures are calculated, the average price next year will fall by about 10 cents per gallon from 2013 numbers. That would push the yearlong average below $3.40 per gallon for the first time since 2010 when motor fuel averaged $2.78 per gallon for the year.

The usual upside risks will still be present--refinery maintenance, storm threats, global disruption--but 2014 promises to be a year that will find more consistent downward pressure on U.S. prices than in any year since the Great Recession, GasBuddy said. It was not uncommon to find a dollars' worth of difference between street prices in different states throughout 2013, and that state-by-state diversity will continue and even broaden in 2014. Many of the differences are attributable to tax treatment, but incredibly variable crude costs and wholesale gasoline prices accentuate the diversity.

Hawaii stands alone as the state that moves according to specific global metrics, and it is the only state where GasBuddy projects a $4 per gallon or higher 2014 average; 14 states spent some time with statewide averages above $4 per gallon at some point in 2013, but GasBuddy said it suspects that such moves will be rare or extraordinary in 2014; and 17 state averages bottomed out below $3 per gallon in 2013, and GasBuddy suspects that such trips to low latitude will be a much more regular occurrence next year, it said.

While 2014 should deliver a more temperate gasoline price background than 2011, 2012 and 2013, GasBuddy said it sees the potential for dramatic price spikes and equally dramatic price plunges. California, for example, will spend some time near the end of the first quarter above $4 per gallon. Illinois, and to a lesser extent some adjacent Great Lakes states, could face a price spike tied to refinery issues that would bring some of the metropolitan areas 50 cents to 75 cent per gallon above year-end 2013 numbers. But the interior of the country should largely have the greatest insulation against super-spikes. Motorists traveling in the Great Lakes, Great Plains and Rocky Mountain states are among those most likely to see pricing points not documented since 2010.

The likelihood of a late first-quarter 2014 rally in prices from winter lows remains quite high. Factors that contribute to a seasonal gasoline rally haven't changed. February through April tends to see refinery maintenance ahead of the driving season, and specifications for gasoline change in the second quarter.

The Northeast is a bit of a new hot spot. There is less North Atlantic refining than in previous years, and imports of gasoline continue to tail off. Super-storm Sandy gave a preview of the region's vulnerability, and northeastern states now tend to be in the highest quintile of motor fuel pricing.

The Pacific Northwest is a beneficiary of the U.S. shale boom. Oregon prices for gasoline dipped below $3 per gallon late in 2013 and together with Washington, this geography may fare better than other regions.

The Gulf Coast and portions of the Southeast represent a mixed bag. States from Texas to Virginia should see refineries supply some of the cheapest wholesale gasoline in the world. But an interruption in this system--a hurricane or precautionary shutdowns--could lead to brief but spectacular price spikes.

Florida and some southeastern coastal areas like Savannah, Ga., and Charleston, S.C., warrant special attention. Many of the barges and tankers traditionally used to ferry gasoline from refineries to Gulf Coast and southeastern ports are now required to move crude. GasBuddy said it would not be surprised to see interior counties in the Carolinas, Georgia and Virginia feature prices 10 cents per gallon lower than coastal areas.

Brooklyn Park, Minn.-based GasBuddy is a division of Oil Price Information Systems (OPIS), Gaithersburg, Md.

Click here to view the full GasBuddy blog post, with detailed maps and additional analysis.