Americans may spend $52 billion more to fill their cars this year Americans may spend $52 billion more to fill their cars this year as OPEC output cuts boost oil prices and state tax hikes take a bigger bite, according to GasBuddy Organization Inc.
The national yearly average will rise to $2.49 a gallon from $2.13 in 2016, analysts at GasBuddy, which tracks retail prices and availability,said in a 2017 outlook. The jump more than reverses the $39 billion decline last year.
Oil prices have jumped 18 percent since the Organization of Petroleum Exporting Countries and other nations agreed to reduce output, pulling up pump prices to the highest for this time of year since 2014. Higher prices may damp fuel demand, which was buoyed as cheap gasoline and stronger economic growth boosted sales of SUVs and other light trucks.
“While the return to cheap gas last year may have felt as long coming as the Cubs bringing home the pennant, low gas prices usually don’t last as long as we’d like,” Patrick DeHaan, Senior Petroleum Analyst at GasBuddy, wrote in the note. “It may be years before some of the low prices we saw in 2016 come back.”
Gasoline will reach above $3 a gallon in at least Chicago, Los Angeles, New York, Seattle, and Washington D.C. in 2017, according to GasBuddy.
While the implementation of OPEC cuts continue to garner headlines, drivers should “look for more states to shift from low taxes to higher taxes and/or automatically adjusting gas taxes,” DeHaan said.