Gasoline prices for travel on Labor Day weekend expected to reach three-year low

Gasoline prices are expected to hit a three-year low as consumers prepare for Labor Day weekend, according to fuel-saving platform GasBuddy.

In its Labor Day travel forecast, GasBuddy said the average price of gasoline will likely continue to decline, falling to $3.27 per gallon on the holiday. That would be the lowest Labor Day price since 2021.

“It's been a great summer for drivers, as gasoline prices have generally been lower than last year,” said Patrick De Haan, head of petroleum analysis at GasBuddy, in a statement. “But just before Labor Day, the gap has grown significantly compared to last year, as there have been few outages or heat waves at refineries this month.”

The estimated price is 50 cents per gallon, or 13 percent, which is lower than last year's price of $3.77. In total, Americans will save $750 million during the travel period from Friday to Monday.

Gasoline prices nationwide peaked at $3.69 per gallon in April, but have been falling steadily since then.

Consumers will feel the price pressure to varying degrees from region to region. On the West Coast, average prices have fallen by 65 cents since last year, while in Washington the difference was 87 cents.

About a third of Americans are planning a road trip this Labor Day weekend, and lower gas prices could result in modest savings compared to previous years.

Since there is no threat to the large gasoline and diesel refineries, Americans may be able to avoid a gasoline price increase in late summer, De Haan said.

“While many Americans wish summer could last forever, the good news is that we may have the best chance in years to get the national average below $3 a gallon,” he said.

“As Thanksgiving approaches, tens of thousands of gas stations are likely to eventually fall back below that level due to declining seasonal demand and cheaper winter gasoline just around the corner,” he said.

Typically, gas stations begin switching to winter gasoline in mid-September. This helps lower gasoline prices across the board, although prices still vary considerably across the country.

Alex Beene, a financial literacy professor at the University of Tennessee at Martin, said the lower prices are largely due to lower demand.

“Now that the sudden surge in post-pandemic travel and return to the office is over, we are seeing a new economy emerge that is no longer as reliant on gasoline,” Beene said News week. “Some things lead to lower demand.”

For one thing, in this post-pandemic era, more jobs are offering remote work and hybrid options, he said. And the rise of electric vehicles has brought about a change in the gasoline economy.

“In many major markets, car buyers have been opting for electric cars over gasoline cars in recent years,” Beene said. “The American consumer is also feeling financially drained, and that's leading to fewer cars on the road for leisure. Add to that stagnating oil prices worldwide, and you have the perfect recipe for falling prices at the pump.”

Overall, oil production in the US is booming, and this surplus is putting downward pressure on prices, says Michael Ryan, financial expert and founder of MichaelRyanMoney.com.

“It’s like an oversupply of tomatoes at the farmers market – prices have to be lowered to sell the product,” Ryan said Newsweekand added that seasonality plays a role.

“As summer ends, our collective urge to take to the streets is fading. Demand is falling and so are prices,” he said, adding that the three-year low was a “double-edged sword.”

“It could also be a sign of economic headwinds,” Ryan said. “Weaker global demand could be contributing to these low prices. It's a reminder: Our economy does not exist in a vacuum.”