California gasoline prices may have hit their peak for the year.
I tossed 23 years worth of pump prices, statewide and nationally, into my trusty spreadsheet to remind myself of gasolines strong seasonal pricing trends: On average, fuel is cheapest in January, peaks in late spring, then begins an ascent that lasts the rest of the year.
Using a government index — tracking all grades of gas by the Energy Information Administration — I found California gasoline prices are typically most affordable shortly after the new year begins. The same is true nationally, even if drivers elsewhere pay less for fuel.
Why the relatively predictable ups and downs?
Well, the typical year starts with less travel following the holiday rush. So, demand for gas falls. Plus, many folks are watching pennies, post-New Years, after overly generous gift giving. Remember, gasoline use is economically cyclical, too.
Those wintertime gasoline bargains are short-lived, though.
History tells us California prices rise relatively slowly but continually through mid-May. Driving — thats demand for gas — increases, then theres the switch to cleaner-but-costlier summertime fuel mixtures. And household budgets are replenished after holiday bills get paid off.
Since 1995, statewide gas prices on average peaked in mid-May – 20 percent above the lows of early January. So this years 50-cents-a-gallon jump to $3.70 — January low to May peak — was actually a below-average upswing (just 16 percent).
But this isnt just a California thing.
Nationally, Januarys price bottom is followed by a slow increase in prices that runs to early June. But the national index grows only by 18 percent, on average, from the wintertime low to the springtime high. (And in 2018, low-to-high was a 15 percent increase to $2.92 a gallon.)
Of course, historic cyclicality also suggests prices will fall for the remainder of the year as the summertime driving peak ends and the gasoline sold reverts to a more traditional (and cheaper) mix.
Apply historical pricing patterns to California gas prices as of July 2, and youll see drivers pay 23 cents a gallon less by Halloween, just before Election Day. Then, theyd save another 23 cents a gallon by Christmas. So, my formula says $3.16 at years end — a total 15 percent drop.
Will that make a difference in how the repeal-the-gas-tax initiative fares?
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