Gasoline prices have hovered around that mark for most of 2023. Relatively low oil prices and lackluster global demand for fuel have driven down prices at the pump from a record high above $5 a gallon last June, analysts said. 

Motorists likely won’t see big changes anytime soon given the weak demand for fuel and low cost of oil, said

Edward Moya,
senior market analyst at trading firm Oanda.

“This is going to be a summer where I don’t anticipate we are going to have significantly higher prices like we typically do,” Moya said.

About 42.3 million Americans are expected to travel 50 miles or more this Memorial Day weekend, a 7% jump from last year and the third-busiest since 2000, according to a survey by AAA.

Car travel this Memorial Day weekend isn’t expected to fully rebound from 2019, whereas air travel is projected to jump past prepandemic levels, according to AAA. 

Those traveling by car this holiday weekend will pay less for gasoline compared with last year. Fuel costs soared in 2022 after Russia’s invasion of Ukraine jolted energy markets. The average price of gasoline peaked at $5.02 in June, according to OPIS, which is owned by Dow Jones. 

The shock to the energy markets was short-lived, however. The U.S. and Europe turned away from Russian oil, but Russia was able to sell more to India and China, alleviating pressure on the global energy market, analysts said.   

While gas prices are down sharply from last year, they are still above where they were before the pandemic. The average price of gasoline was $2.84 a gallon at this time in May 2019, according to OPIS.  

Gasoline prices in the U.S.—typically correlated with the price of oil—haven’t budged much this year due to a pessimistic economic outlook, analysts said. Recessionary fears around the globe have also held back demand for oil in other parts of the world, they said.

In the U.S, gross domestic product rose at an inflation- and seasonally-adjusted 1.1% annual rate from January to March, according to the Commerce Department. A recent poll of economists found that 61% of them expect a recession within the next 12 months.

“It’s very difficult for oil to rally if the majority of folks in the financial community—speculators, investors—think there is going to be a recession,” said

Tom Kloza,
global head of energy analysis for OPIS.  

Concerns about the health of regional banking and aggressive rate increases from the Federal Reserve have taken a toll on economic prospects in the U.S., Moya, the Oanda analyst, said. The rate increases are leading to tighter credit conditions and are starting to squeeze some small and medium-sized businesses, he said. 

“You are going to see a more cautious approach to spending going forward,” Moya said, dampening demand for fuel.

That cutback in spending is already showing up at the pump. Gasoline stations reported a 6.9% decline in sales through the first four months of 2023 compared with the previous year, according to figures from the U.S. Census Bureau.

The average price of gasoline hit a high of $3.69 this year in April. The small bump came after a group of large oil producers led by Saudi Arabia said they would cut oil production in May, leading to a temporary jump in crude prices.

Summer could still shake things up for gas prices, especially if storms knock out oil production in the Gulf of Mexico, said

Andrew Gross,
a spokesman for AAA.  

Forecasters with the National Oceanic and Atmospheric Administration predict a “near-normal” Atlantic hurricane season over the next six months, with 12 to 17 large storms. Some are expected to become hurricanes.  

A normal hurricane season—14 named storms—can be destructive. In 2022, NOAA recorded 14 storms, including two, Ian and Fiona, that became major hurricanes.

“Hurricane season is the big question mark,” Gross said.

Write to Joseph De Avila at [email protected]