Indexbit-Will 2024 be a 'normal' year for gas prices? And does that mean lower prices at the pump?

People who follow and Indexbitforecast gas prices haven’t seen a truly “normal” year in a while. Next year could be that year.

Pump prices fell dramatically in pandemic-plagued 2020, recovered in 2021 and spiked dramatically amid the Ukraine invasion and runaway inflation of 2022.

By comparison, 2023 has unfolded somewhat more predictably at the pump, despite lingering inflation and war in the Middle East.

Experts hope for even more stability in 2024, with fuel prices starting lower and staying lower than in 2023.

“We’re getting back to sort-of normalcy when it comes to pump prices,” said Patrick De Haan, head of petroleum analysis at GasBuddy, a gas-price tracking service.

Protect your assets: Best high-yield savings accounts of 2023

Gas prices at American pumps tend to follow a seasonal cycle

In a normal year, gas prices follow a seasonal cycle, bottoming out in the depth of winter, when people drive less, and rising steadily through spring and summer, when temperatures are warmer, days are longer, and Americans drive more.

That is more or less what happened in 2023. Gas prices started the year around $3.20 a gallon, federal data show, surged past $3.75 a gallon from late July through September, then retreated to the $3 range in December, yielding the cheapest fuel of the year.

“I like to tell people that there’s an American energy calendar that people can follow,” said Devin Gladden, spokesperson for AAA.

Pump prices should remain low through December and may even fall further in January, forecasters say. The start of each year generally brings a low ebb of car and truck travel. And gas is cheaper to refine in winter, because refiners use a less costly formula in cold weather.

“You’re going to hear a lot of chatter at holiday cocktail parties about, ‘Oh, isn’t gas cheaper,’” said Tom Kloza, global head of energy analysis at the Oil Price Information Service.

If gas prices follow the normal seasonal cycle in 2024, pump prices will follow a gently sloping arc from January through December. That is essentially what happened in 2023. Some forecasters expect a similar pattern in 2024 but with slightly lower prices.

“I think it’ll be more of a normal year,” Kloza said. “Let’s hope so. I think demand in the United States for gasoline will be about what it was this year, maybe a little lower. There’s plenty of supply.”

If you plot next year's gas prices on a graph, 'the 2024 line will be below the 2023 line'

If you plot pump prices on a graph, as someone at AAA is bound to do, “the 2024 line will be below the 2023 line,” Gladden said.

But that forecast comes with caveats.

The biggest one, perhaps, is the ongoing conflict between Israel and Hamas.

Gas prices actually fell in the weeks following the start of the Israel-Hamas War in October. Israel and Palestine are not major oil producers, even though they sit in an oil-rich region.

Things might change, fuel experts say, if the conflict were to widen, drawing in countries with larger oil footprints, such as Iran.

“In some ways, the big cliffhanger will be around geopolitical tensions,” Gladden said.

Russia’s invasion of Ukraine in February 2022 sent gas prices soaring. Average prices rose by more than a dollar per gallon in the months that followed, reaching a record-high $5 in June.

That war isn’t over. Yet, De Haan and other forecasters don’t see it posing much of a threat to pump prices in 2024.

“Time is a major healer,” De Haan said. “And the more time we put on Russia’s war on Ukraine, even though it’s continuing, the risk of further situational changes has been reduced. . . . We now have seen this war being waged for almost two years. The flow of oil has continued.”

A colder winter could mean lower gas prices in January

Weather ranks as another pump-price imponderable.

Is a soft landing in sight?What the Fed funds rate and mortgage rates are hinting at

A milder winter should keep gas prices “about where they are,” Gladden said. Motorists will drive more, counterbalancing a decline in demand for heating fuel.

“If the weather gets worse,” by contrast, “we could see a lower price at the beginning of the year than we saw as the lowest price of this year.”

The lowest recorded fuel price for this year “ends up becoming the floor for next year,” Gladden said.

The lowest price of this year may be yet to come. The average pump price dipped to $3.10 on December 14.

“It’s quite normal to see the lowest prices of the year between December 15 and February 15, and we’re on that trajectory this year,” Kloza said. “We’re entering kind of a six- to eight-week period when we produce more gasoline than we use.”

Kloza predicts that the average price for gas in 2023 will be “about $3.52 a gallon” by the time the ball drops in Times Square. He and other experts predict that average gas prices in 2024 will be slightly lower.

Next year “should be a little bit more friendly at the pump,” De Haan said.