Gas Prices Will Fall in 2014. But You May Pay More at the Pump Anyway

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Analysts expect gas prices to decrease or remain mostly flat not only in 2014, but for years to come. Nonetheless, drivers in some states will see higher prices at the pump, starting January 1.

Gas prices may not have seemed all that cheap in 2013. But in fact, prices for the year as a whole were less expensive than they have been. According to AAA’s year-end report, American drivers paid $3.49 per gallon of regular, on average for 2013. That’s the cheapest per-gallon average since 2010; the national average was just above $3.50 in 2011 and hit $3.60 per gallon in 2012. Even so, 2013 stands as the third most expensive year for gasoline prices in U.S. history.

Looking forward, the experts predict that while gas prices will rise and fall from month to month, yet the overall trend is for prices to keep retreating in 2014. GasBuddy analysts say that thanks to increases in crude oil production at home, as well as forecasts of flat demand as consumers continue to scale back on driving and shift to more fuel-efficient cars, gas prices are likely to average under $3.40 in 2014. “When all the final figures are calculated, the average price next year will fall by about 10cts gal from 2013 numbers,” a GasBuddy post states.

AAA is predicting much of the same. “Gas prices most likely will average slightly less in 2014 as refineries continue to expand production capacity and increasingly rely on North American crude oil,” a year-end AAA post states. “Gas prices should average slightly less in 2014 if everything goes as expected, but most drivers may not even notice because the difference could be relatively small,” said AAA spokesman Avery Ash.

(MORE: Why the Era of High Gas Prices Is Supposedly Ending)

In some cases, drivers won’t benefit from the decline in wholesale gas prices because consumer prices will be flat or even higher thanks to rising gas taxes imposed at the state level. Essentially, as of January 1, the gas tax in Pennsylvania increases by 9.5¢ per gallon of regular and 13¢ per gallon on diesel fuel, at the wholesale level. Over the course of five years, the state gas tax will rise 28¢ per gallon, according to the Pennsylvania Department of Transportation. It’s unclear the extent to which the wholesale tax hike will be passed along to customers, but as a spokesperson for one fuel supply chain told the Associated Press, “Our margins are extremely minimal with gasoline and any increase in cost, like any other product, ultimately gets passed on in the retail price.”

West Virginia is another state where gas taxes are being hiked as of January 1, though only by 1¢. Other states increased gas taxes in the recent past, such as Wyoming, which raised the fuel tax from 14¢ to 24¢ in 2013, the largest increase of any state last year. Still other states, including South Carolina, New Hampshire, and beyond, have gas tax hike proposals in the works.

There are also active discussions about gas tax increases at the federal level; Atlantic Cities summed up a couple proposals getting attention—a flat 15¢ per gallon hike, and a new per-mile-driven tax. In all cases, taxes are being increased or perhaps introduced in order to upgrade, build, or simply maintain roads and infrastructure.

(MORE: Congress Is Screwing Public Transit Users — And We’ll All Pay the Price)

The result would seem to be that even as predictions call for the era of constantly escalating gas prices to end, because of increases in gas taxes and other marketplace factors, drivers shouldn’t expect to get a significant break at the pump anytime soon. And in many situations, drivers will surely pay more.

2 comments
CatherineMiller
CatherineMiller

I am paying 4 dollars a gallon for regular. I am spending 100 dollars more a month for gas, than I did last year.This is just to go to work and back. I work in in-home health care, need my car. I am thinking of changing jobs so I don't have to drive. Sad, because I love my recent job.

zuchinno
zuchinno

I guess TIME was really wrong since it's about $4.34 where I am in CA and *everyone* except them was predicting a massive hike beginning in February/March.