Will the price of gas go up or down in 2024 according to experts?

In 2023, gas prices came down from their record high in 2022. However, according to forecasts published by the US Energy Information Adminstration (EIA), prices at the pump are expected to rise next year. While in October, the federal agency projected that the average price per gallon for November and December would hover around $3.40 a gallon, the average for 2024 is expected to rise to $3.60.

Why will gas prices increase in 2024?

The increase in oil prices is influenced by various factors, including production levels both in the US and internationally, as well as geopolitics.

Decreasing demand for gasoline

Gasoline demand is expected to drop on a per capita basis to levels lower than those recorded before the pandemic. “An increase in remote work in the United States, improvements in the fuel efficiency of the U.S. vehicle fleet, high gasoline prices, and persistently high inflation have reduced per capita gasoline demand” are a few of the reasons the EIA gave to explain the decrease in demand. At the production level, lower demand for gasoline and an increased refining capacity led to a four percent increase in US gasoline inventories from early September to mid-October.

Decisions by OPEC

During an election year, countries with the power to influence the price of oil often manipulate their production levels to increase or decrease prices, depending on which political party they are more friendly to. Saudi Arabia, a major oil producer, could create a challenge for the White House if their decreases in production contribute to higher-than-average gas prices during an election year. In 2022, OPEC countries voluntarily reduced their production levels to increase the price of oil. Recently, OPEC members agreed to extend the cuts for a second time, which means that without increases from non-OPEC producers, prices will likely rise if demand remains constant. In March 2024, the organization will begin increasing production “gradually [and] subject to market conditions.”

According to the Short-Term Energy Outlook, published by the EIA, non-OPEC members are expected to increase production to levels that offset the decreases by OPEC. However, said increases will not be enough to keep the Brent crude oil price from rising from an average of $83.99 in 2023 to $93.24 in 2024. Next week, the EIA will release another outlook, focusing more on the shifts in production that will impact consumers in 2024.