Business & Real Estate

Gas prices have you guessing? Join the experts

Sacramento-area residents are hoping 2017 gas prices hover around the current average of $2.50 per gallon. Lydia Holland fills up at a gas station in Sacramento, Calif., on Nov. 12, 2014.
Sacramento-area residents are hoping 2017 gas prices hover around the current average of $2.50 per gallon. Lydia Holland fills up at a gas station in Sacramento, Calif., on Nov. 12, 2014. Associated Press file

Sacramento-area motorists baffled by gas prices in 2016 are in good company. Many energy experts are confounded as well.

Throughout this year, at-the-pump costs in the area – and throughout much of California – have varied sharply from historical averages, defied trends and generally behaved in an unpredictable manner.

As we near the end of 2016, Sacramento-area gas is going for around $2.50 a gallon, up just about a dime over nine months. In between, the local average dipped within pennies of $2 a gallon but fell well short of the $3 threshold.

The unusual gyrations actually began prior to Jan. 1. Statewide gasoline consumption, which had been relatively flat for years, accelerated in the fourth quarter of 2015, according to the state Board of Equalization. Californians purchased 3.799 billion gallons of gasoline in the last quarter of 2015, up 2.3 percent over 2014 and the most gas purchased in the fourth quarter since 2007.

I remember when it was $40 to fill the tank. Now, it’s around $20 and change … I’m going to enjoy it while I can.

Sacramentan Nicole Hamilton

Historically, demand increases send gas prices soaring, but it created barely a ripple. The average fourth-quarter price for gasoline statewide in 2015 was $2.63 per gallon (minus sales tax), according to the U.S. Energy Information Administration. That was the lowest fourth-quarter price for gasoline since 2008.

By mid-February this year, Sacramento-area gas prices were hovering at 2008 levels – $2.08 a gallon, according to national fuel market tracker GasBuddy.com.

Some analysts projected gasoline in the $3.50-a-gallon range by Memorial Day, the traditional kickoff to the summer driving season. It didn’t happen.

Gas in the Sacramento area was going for around $2.70 a gallon by Memorial Day. And then, instead of the usual steady increase throughout the busy summer travel season, local gas prices slowly edged downward.

By mid-August, GasBuddy said the local average was $2.48 a gallon. GasBuddy cited ample fuel supplies and a notable lack of problems at in-state refineries.

With the arrival of Labor Day, the traditional end to the summer driving season and a time when refineries are gearing up to produce cheaper fall-winter gas blends, analysts expected prices to head south.

Instead, they went up, to $2.63 a gallon by mid-September in the Sacramento area. And then they leveled off – holding at $2.63 in mid-October, according to GasBuddy – and have pretty much stayed in place since then.

Local motorists have welcomed the extended period of relatively low gas prices and are hopeful of a repeat in 2017.

“I can’t complain. It’s been pretty great for most of the year … way better than $4 gas I was getting a few years ago,” said Sacramentan Thomas Smith, filling up last week at the Valero station at 3100 Broadway, where regular was listed at $2.29 a gallon.

At the nearby Arco station at 21st Street and Broadway, regular was going for $2.19 a gallon, and Sacramentan Nicole Hamilton was filling up her Ford sport-utility vehicle with a smile on her face: “I remember when it was $40 to fill the tank. Now, it’s around $20 and change. That really adds up … I really hope it keeps going for a long time, but it seems like it always goes way up again … I’m going to enjoy it while I can.”

Sacramento-area gas is around $2.50 a gallon, up just about a dime over nine months. The price is far below $3.45 per gallon the area saw at this time in 2012 and 2013.

On Tuesday, AAA Northern California’s monthly Fuel Gauge Report said the average price of unleaded regular in Sacramento was $2.50 a gallon, down 10 cents from the previous month. In Marysville, AAA said gas could be had for $2.28 a gallon.

Arguably the most dramatic indication of the baffling year in local gas prices came in the past two weeks. On Nov. 30, OPEC agreed to cut oil production by 1.2 million barrels a day, an announcement that in past years would have sent gas prices upward like a skyrocket.

AAA said the national average price of gas did shoot up around a nickel since the OPEC announcement. In California, prices actually fell a few pennies.

“While the proposed cuts in production have had the intended effect on prices, California gas prices have continued to drop due to abundant crude surplus and diminishing demand,” said Cynthia Harris, AAA spokeswoman.

In the Sacramento area, at-the-pump prices have barely moved since OPEC’s announcement, rising 0.8 cents in two weeks to around $2.50 a gallon, according to GasBuddy.

Patrick DeHaan, senior petroleum analyst for GasBuddy, was skeptical about the resolve of OPEC nations to stick to production cuts: “If I had a nickel for every time OPEC said it was going to cut oil production, I could probably buy everyone free gas on Christmas,” he said.

Still, DeHaan said even a threatened show of force by OPEC is ominous and could produce negative impacts in 2017: “OPEC seems to be taking the role of the Grinch this holiday season. The era of low oil prices may be over for now.”

Mark Glover: 916-321-1184, @markhglover

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