Fasten your seat belts and hold onto your wallets for the next fill-up. Gasoline prices are going to be very volatile in 2014, says a nationally quoted analyst.
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View full size CLEVELAND -- Look for lower average gasoline prices in 2014 - but wild price volatility from region to region, day to day and even at the neighborhood level, predicts GasBuddy, the independent price watchdog.
For the entire coming year, the U.S. average price should be just below $3.40 a gallon, for the first time since 2010, predicts Tom Kloza, chief oil analyst with the Oil Price Information Service, and GasBuddy's parent company.
That's 3 or 4 cents a gallon less than the U.S. average 2014 price that the U.S. Energy Information Administration predicted earlier in December.
Shale oil - and a federal policy prohibiting export of U.S.-produced oil (except to Canada) - are the reasons for this predicted price relief at the pumps.
Increased production of shale oil means many U.S. refineries don't have to rely on the more expensive Middle East and African crude oils. The price difference can be dramatic, as much as $20 a barrel, currently about $11. And those prices are for the best grades of oil. An increasing number of U.S. refineries can use American and Canadian crude blends that are significantly less costly.
But other factors in 2014, include:
-- Stepped up export of gasoline and diesel from U.S. refineries,
-- Expected increases in U.S. gasoline demand,
-- Lower amounts of gasoline in bulk storage,
-- Greater amounts of cheap ethanol for blending,
-- And new marketing wars between the oil companies for consumer brand loyalty with fancy additive packages versus independents selling at break-even prices mean prices will be on a roller coaster.
"While 2014 should deliver a more temperate gasoline price background than 2011, 2012, and 2013, we see the potential for dramatic price spikes and equally dramatic price plunges," Kloza writes in his forecast.
But in the Midwest, there is a good chance that prices will tend to be lower than national average prices because of recently completed refinery upgrades, the forecast notes.
"The last two years have seen major refinery upgrades in the Midwest, and many of those states could see motor fuel prices spend plenty of time below $3 a gallon in 2014," Kloza said.
In Ohio, the average price for the year will range between $3.15 and $3.40 a gallon, the analysis predicts.
But states surrounding Ohio, from West Virginia to Michigan are in for a bit of a rougher ride ranging from an average of $3.40 to $3.65 a gallon over the year.
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View full sizeOhio motorists will fare better than those in other Midwestern states when gasoline prices spike this spring Spring price spikes, of course, are built into the GasBuddy model - as refineries shut down for maintenance and better weather leads to more driving - creating a perfect argument for sudden spikes in price.
Ohio's spring spike will range between $3.75 and $3.84 per gallon, Kloza predicts.
On today, this last day of 2013, there are no maintenance issues, but consumers should buckle up anyway for a rough ride at the pumps.
The average price of a gallon of gas in Cleveland Tuesday is about $3.38 a gallon, according to GasBuddy's calculations.
That's a dime higher than the Christmas Eve price and about 20 cents higher than average prices at Thanksgiving. One reason is that the price of U.S.-produced oil has been moving up, and is now about $100 a barrel again.