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January 2, 2014

Experts forecast lower gas prices

Gasbuddy.com offers a fuel price outlook for 2014.

In a word, it will be volatile. There will be wide price variations, but the year should end with lower national average prices.

U.S. gasoline prices will indeed see huge swings and regional volatility in 2014, but GasBuddy analysis suggests that when all the final figures are calculated, the average price next year will fall by about 10 cents a gallon from 2013 numbers.

That would push the yearlong average below $3.40 gal for the first time since 2010 when motor fuel averaged $2.78 gal for the year. The usual upside risks will still be present (U.S. refinery maintenance, storm threats, disruption in the Middle East and North Africa), but 2014 projects to be a year that will find more consistent downward pressure on U.S. prices than in any year since the Great Recession.

Retail gasoline prices will peak at $3.83 gallon this spring, barring an unforeseen price spike.

U.S. crude production has advanced to its highest level since 1989, and imports of all foreign crude look to continue to drift lower. U.S. crude imports in late 2013 were as much as 4 million barrels per day below some of the levels witnessed in 2010.

North American production increases in recent years have more than made up for the loss of Libyan crude. Crude oil costs never saw a super-spike in 2013. The United States has heavy layers of insulation that should protect it from price spikes that could impact other continents.

It was not uncommon to find a dollar’s worth of difference between street prices in different states throughout all of 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 single U.S. state that moves according to specific global metrics, and it is the only state where GasBuddy projects a $4 gal or higher 2014 average.

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