AAA Forecasts 2020 to Bring Americans Greater Savings at the Gas Pump

American households spent 11% of 2019 income filling up

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Americans saved $330 filling-up at the gas pump last year compared to 2018. Even more good news: AAA fuel experts believe 2020 could bring even cheaper gas prices, putting more dollars back in Americans’ wallets.

“On average, American households are spending 11% of their annual income, which is about $7,000 a year, on gasoline,” said Dan Goodman, manager of public affairs for AAA Northern New England. “So, when there are changes at the pump it is widely noticed, especially since putting gas in your car is essential.”

Americans worked for 5 minutes to earn enough to buy 1 gallon of gasoline in 2019. On average, yearly per-vehicle gasoline use totals approximately 462 gallons, which equates to 39 hours – one week of work – to afford gasoline for the year. That may not seem like a lot, but when gas prices increase, consumers notice and consider making lifestyle changes.
 

  • Maine households saved $475 filling-up at the gas pump last year compared to 2018, and spent 12.8% of their 2019 income filling up, which is about $6,787 a year. They worked an average of 6 minutes to earn enough to buy 1 gallon of gasoline in 2019, which equates to 46 hours – one week of work – to afford gasoline for the year.

 

  • Vermont households saved $453 filling-up at the gas pump last year compared to 2018, and spent 12.1% of 2019 income filling up, which is about $6,991 a year. They worked an average of 5.7 minutes to earn enough to buy 1 gallon of gasoline in 2019 which equates to 44 hours – one week of work – to afford gasoline for the year.

 

  • New Hampshire households saved $511 filling-up at the gas pump last year compared to 2018, and spent 9.3% of 2019 income filling up, which is about $6,633 a year. They worked an average of 4.3 minutes to earn enough to buy 1 gallon of gasoline in 2019 which equates to 34 hours – one week of work – to afford gasoline for the year.

In AAA’s latest gas price survey, driving less (76%) was the most common response to how Americans would make a lifestyle change to offset gas price increases. Also likely: combine errands or trips (62%), reduce shopping or eating out (51%) and delay major purchases (30%).

“The average tipping point to start making lifestyle changes to offset higher gas costs is about the $3 mark. That price point is a little higher for motorists on the West Coast, where gas prices are generally more expensive,” added Goodman. 

In February, the national gas price has averaged at $2.45, which is 15 cents more expensive than this time last year.  As winter ends and the nation enters the spring driving season, motorists can expect to start paying more. Spring brings higher pump prices as retailers begin to switch to the more expensive to produce summer blend gasoline.

 

Oil Market Dynamics

The first few months of the year have indicated that 2020 will likely bring more volatility to the global crude market. The year started with crude prices soaring amid escalating military tension between the U.S. and Iran. When compared to January 2019 crude prices, which ranged between $48 - $54/bbl, January 2020 saw prices jump as much as $15/bbl more to $63/bbl. The price difference helps to explain why pump prices were so much more expensive at the start of the year.

However, the coronavirus has shifted that dynamic. Since the global public health crisis emerged a few weeks ago, domestic crude prices have fallen dramatically – even dropping below $50 per barrel briefly. Prices have decreased because global crude demand is expected to fall as a result of a slowdown in international travel and China’s crude consumption, since it is the world’s second largest crude consuming country behind the U.S., due to widespread quarantines in the country. Until it appears that the public health threat from the virus declines and China’s industrial sector recovers from the impact of the virus on production, crude prices are likely to continue facing downward pressure. Ultimately this would bring relief at the pump for American motorists during the spring driving season.

The next few weeks will be critical in determining how spring pump prices will fare in 2020. If it appears that the virus has been contained, crude prices will likely stabilize and spring pump prices will increase as they typically do ahead of the busy summer driving season. If the global threat from the virus remains persistent, low crude prices could contribute to cheaper than expected pump prices that bring more savings to drivers.

Visit GasPrices.AAA.com for national and state gas price averages and trends.

As North America’s largest motoring and leisure travel organization, AAA provides more than 60 million members with travel, insurance, financial, and automotive-related services.  Operating 19 offices throughout Maine, New Hampshire and Vermont, AAA Northern New England is a not-for-profit, fully tax-paying corporation and serves as an advocate for the safety and security of all travelers.  Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile

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AAA Northern New England is a member club affiliated with the American Automobile Association (AAA) national federation and serves members in Maine, New Hampshire, and Vermont.