New York
CNN
—
The nearly 40 million Americans expected to hit the roads this Memorial Day weekend will have something to make them smile while sitting in traffic: cheap gas prices.
The national average price of a gallon of gasoline is expected to be $3.08 on Memorial Day, according to projections released Tuesday by fuel savings platform GasBuddy.
That would be the lowest gas price at the unofficial start of summer since 2021 and well below GasBuddy’s average of $3.58 last Memorial Day. It’s also sharply lower than 2022, when gas prices on Memorial Day stood at $4.60.
The findings underscore how the relatively low cost of fuel has emerged as one of the biggest bright spots in the US economy, even as a trade war and worries about slower economic growth persist.
“This is a win for consumers. And if the stars align later this summer, we could even see the national average drop below $3 a gallon,” Patrick DeHaan, GasBuddy’s head of petroleum analysis, told CNN in a phone interview.
On an inflation-adjusted basis, gas is expected to drop to the cheapest Memorial Day price since 2003, excluding the Covid-19 pandemic, according to GasBuddy data shared with CNN.
“Americans have to work less to fill up their tank,” De Haan said.
Yet it’s also true that one of the reasons energy prices are muted is concern that Trump’s tariffs will damage the US and world economies.
The roads are expected to be jammed with travelers this holiday weekend. AAA forecasts that 39.4 million people will travel by car over Memorial Day weekend, up 3% from last year and 4.6% ahead of 2019.
Subdued gas prices are a highly visible way to drive down the cost of living, one of the leading frustrations among voters last election.
“Americans are just bombarded by the price of gasoline,” said Bob McNally, president of consulting firm Rapidan Energy Group. “Lower gas prices are like a psychological tax cut. Even if you’re not filling up your tank that day, chances are you’re seeing the price when you drive around.”
Lower gas prices have already contributed to better-than-expected inflation reports in March and April.
It’s a trend that could continue. GasBuddy projects prices will average $3.02 a gallon for the entire summer period of Memorial Day through Labor Day.
After gas prices surged to record highs in 2022 following Russia’s invasion of Ukraine, President Donald Trump has focused intensely on combating energy prices by promising to unleash domestic production, slash red tape and push OPEC to add supply.
US oil prices have plunged about 20% since Trump’s second term began. Analysts say that drop has been driven in part by Saudi Arabia and OPEC’s sharp production increases – moves that Trump publicly called for days after taking office during a high-profile speech at Davos.
McNally, a former White House energy advisor to President George W. Bush, said Trump’s efforts to encourage Saudi Arabia to pump more oil appear to have helped. McNally noted that besides the Davos speech, Trump has taken a lighter touch with pressuring Saudi Arabia, especially compared with the intense pressure the president has put on Walmart, China and his handpicked Federal Reserve chairman, Jerome Powell, to follow his policy preferences.
“He’s been more deft this time,” McNally said, referring to Trump’s efforts to persuade OPEC to pump more.
However, cheaper oil also reflects fears about a separate Trump initiative: a global trade war that business leaders and economists worry is hurting the economy.
Oil prices crashed to four-year lows in early April when Trump’s sky-high tariffs sent recession fears skyrocketing. Crude, the lifeblood of the modern economy, rebounded after Trump paused many of those tariffs.
Another factor behind lower oil prices: Trump has not followed through on former President Joe Biden’s final-hours move on January 10 to target Russia’s energy sector with harsh sanctions.
“A lot of the reason crude prices have fallen is pessimism about the economy and Saudi Arabia and OPEC producing more,” said McNally.
Unfortunately for consumers, gasoline prices have not fallen by nearly as much as crude.
In other words, gas prices are technically high relative to where oil is trading.
McNally blames that mismatch on the shutdown of refineries around the United States as forecasters projected weaker gasoline demand due to the rise of electric vehicles.
“It’s like Mark Twain said: Reports of gasoline’s death are premature. It’s not dying, but we are reducing the production of it,” McNally said.
