It feels wrong to use “silver lining” and “global pandemic” in the same sentence, though one slightly less terrible aspect of the terrible year that was 2020 is that gasoline prices have been, well, pretty low.
The party’s bound to end, but not for a while yet, according to industry analyst GasBuddy.com. The company on Jan. 5 issued its outlook for 2021, predicting a “sharp rally” in gas prices before the end of the year, with the national average rising as high as $3 a gallon as the economy climbs out of the wreckage of the COVID-19 pandemic.
So enjoy the cheap gas while it lasts — not that many of us are traveling. The fact that people haven’t driven nearly as much during the pandemic is a big reason in fact that gas is so cheap, as low as $1.76 for a gallon of regular in Brownsville as of Tuesday.
“As Americans stay home, demand drops and prices fall,” said Patrick DeHaan, GasBuddy senior petroleum analyst.
Low gas prices generally signal that something’s not right with the economy. So when prices get back to somewhere near pre-pandemic levels, motorists can rejoice that the economic picture is brightening, even if the pain at the pump is a bit more acute.
“I think it will progressively happen over the course of the year,” DeHaan said. “It’s just really contingent on how quickly we recover from COVID-19, but certainly looking at the details I would expect a rally in spring, but of course by the end of the year we should probably be well on track for a return to some sense of normal.”
GasBuddy’s 2021 Fuel Price Outlook also predicts that the nation’s yearly gasoline bill will rise to nearly $326 billion, an increase of $45 billion from last year, and that the average household will see its annual spending on gasoline rise to $1,670. While prices are likely to remain in the $2.00-per-gallon range for much of the country, $3.00-plus will be the new normal in 2021 for major cities in places like California and Hawaii. The same could happen in cities like New York, Chicago and Phoenix, said the report.
Closer to home, Dallas-Fort Worth and Houston this year aren’t likely to see average prices higher than $2.75 and $2.70 respectively, according to the forecast, which did not include projections for the Rio Grande Valley. Some good news, DeHaan said, is that that even when the economy recovers and makes gasoline more expensive, he’s “very optimistic” prices will remain well below record highs.
“There are a lot of wild cards in the year ahead, the two largest wild cards being COVID-19, and obviously we have a new administration coming into the White House and a dramatically different view on fossil fuels,” he said. “There could be some changes in the agenda that ultimately affect gas prices, maybe not in 2021 but down the road in 2022 if there are any policy changes.”