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Labor Day weekend gas prices have hit a 12-year low this year, according to a report by the U.S. Energy Information Administration on Friday.
Thanks to the low prices, motorists in the United States saved approximately $19 billion in gas money this summer compared to last, according to calculations by GasBuddy.com.
While $19 billion is a significant savings, prices at the pump have gone up in the two weeks, and drivers might be inclined to view the recent price hike as negative, but Patrick DeHaan, senior petroleum analyst for GasBuddy, aimed to soothe: "While today’s trend may lead to some frustration, gas prices are likely to soon revert, leaving behind what has been the cheapest summer at the pump in over a decade."
Oil prices have been volatile over the past two weeks as investors speculate regarding the possibility of a production freeze during the next meeting of the Organization of Petroleum Exporting Countries (OPEC) later this month. A strong dollar, coupled with concerns that the Federal Reserve may increase interest rates, has also caused prices to spike upwards to $2.24 a gallon going into Labor Day—still, the figure is significantly lower than $2.51 a gallon from 2015, according to EIA figures.
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Chronically low oil prices have led governments to stock up on oil and natural gas supplies, pushing prices even lower. After sanctions against Iran went offline in January, the nation began competing with the United States and Saudi Arabia to regain market share, causing a major unhampered supply glut.
According to the EIA, prices are expected to fall farther as the summer driving season comes to a close, and refineries scale back on crude oil purchases as focus on seasonal maintenance.
During the fourth quarter of this year, prices will drop to a national average of $1.95 a gallon, bringing the yearly average to $2.06 for 2016, according to EIA estimates.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…