Gas prices: The most important factor before a road trip

According to GasBuddy, the national average for regular gas prices is beginning to increase. With peak travel season around the corner, and with a Forbes Advisor Survey revealing 34% of Americans plan to take a road trip in 2024, gas prices will likely be a factor in how Americans make their travel plans.

GasBuddy Head of Petroleum Analysis Patrick De Haan joins Yahoo Finance for the latest edition of Travel Guide 2024: Industry Insights, sharing helpful tips for consumers about gas prices as they plan their road trips.

In the near term, De Haan states there are a few key catalysts that could push prices higher: "I think right now the Middle East is something we continue to watch. Though, there hasn't been much impact, oil prices (BZ=F, CL=F) have still struggled. The Middle East could certainly change. We've seen situations where things drastically change over night, and of course there's a lot of crude oil being produced in the Middle East. Seasonally, though, I'm looking much more at refineries. This is the time of year that there's a lot of pressure on refineries. They are doing maintenance before the summer. They are transitioning over to summer gasoline. In the background, demand is all going up at the same time. That puts a lot of pressure on refineries to finish that maintenance, to get back online and boost production."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video transcript

AKIKO FUJITA: Well, gas price is ticking slightly higher today, following the upward trend we've been seeing over the last month according to GasBuddy, as we head into peak travel season. How should road trippers factor gas prices into their plans? Joining us now is part of Yahoo Finance's travel guide 2024 industry insights. We've got Patrick De Haan, GasBuddy, head of petroleum analysis. Patrick, always good to talk to you today.

What does that trajectory look like as we go into the peak travel season or peak road trip season in terms of gas prices?

PATRICK DE HAAN: Well, Akiko, this is the time of year when we tend to see more bumps in the road ahead with rising gas prices. All of that really due to the seasonal ups and downs. Right now the ups refinery maintenance a more costly summer version of gasoline coming into view. And rising demand also at the stage for gas prices that could rise another 20 to $0.50 a gallon between now and say memorial day.

But all in all, it's probably not going to be quite as high as what we've seen in the last couple of years. That's because some of the imbalances like COVID and Russia's war in Ukraine have faded to the rear view, prices still remain a bit elevated. Inflation is still running higher than expectations. And that's keeping pressure on gas prices. But it's not going to be the worst summer to hit the road.

AKIKO FUJITA: Yeah, that's a good start at least for planning some of the summer travel. You said peak demand or not looking specifically at demand. There's obviously the global picture we look at that tracks gas prices. There's also the demand domestically and I wonder Patrick, Pras was talking about how drivers are increasingly looking at plug-in hybrid EVs or fully electric EVs. How much of that has affected demand tied to road trips or just tied to the peak travel season for gas?

PATRICK DE HAAN: I think that certainly starting to come into view as the number of EVs and even things like PHEVs have increased. Gasoline demand is nowhere near record levels. In fact, even right now, it's still seasonally low although demand is going up and I think over time, more of the reason why we're seeing gasoline demand far below record levels is because of this transition, which is accelerated significantly and likely will continue.

Gasoline demand right now, only about 8.5 million barrels a day. Actually, according to the government 8.4, I would say normal for this time of year. If you would take out EVs would probably be somewhere in the upper eight. So I think it's having more of a dent on gasoline demand and that probably will continue here as long as the White House and whoever is in the White House continues to view EVs favorably. There will be plenty of incentives to increase those number of EVs on the roads.

AKIKO FUJITA: There's obviously the question about charging and other issues that pop up with driving a battery, electric car. But I wonder if you've done a cost comparison at all. If you're just even looking at hybrids versus an ice car, traditional ice car. Is there a meaningful cost difference here. If there's drivers out there who are saying, look-- looking at where gas prices are tracking, which option should I go with?

PATRICK DE HAAN: Yeah. And there's a lot of different ways to slice this. For example, what type of vehicle? Where you are, California's gasoline prices are notoriously high hovering just below the $5 a gallon mark. So in an area like California where there is a lot of infrastructure for charging EVs. It can be much more cost advantageous to have an EV in California than say in the middle of Wyoming, where they lack the infrastructure.

Generally speaking, EVs are going to have lower energy costs that is instead of gasoline, electricity tends to be cheaper. And also maintenance costs on EVs tends to be lower. But up front the cost of an EV tends to be much more expensive. So studies from the University of Michigan have found that over the long run, having an EV can save you $8,000 over the course of 200,000 miles.

But as Chris mentioned, there's a lot of different use cases. So if you're on the highway more often than in the city, you may be better off going with a hybrid or a plug-in electric vehicle. So a lot of dynamics here but EVs do have some benefits. Though I think in what he was mentioning, plug-in hybrid electric vehicles are really filling the void. Americans, some of them don't want to make the jump right into 100% electric vehicle right away.

And PHEVs are certainly providing some of the benefits, lower maintenance and certainly lower costs of filling up with electricity as long as you can remain within those relatively smaller battery ranges.

AKIKO FUJITA: Yeah. It's the comfort of having gas as the backup within the car. Finally, as we look to peak travel season, you talked about where gas prices could be tracking. Where do you think viewers should be looking at as key catalysts that could push prices higher?

PATRICK DE HAAN: Well, I think right now, the Middle East is something that we continue to watch though there hasn't been much impact. Oil prices have still struggled. The Middle East certainly could change. We've seen situations where things drastically change overnight and of course, there's a lot of crude oil being produced in the Middle East. Seasonally, though, I'm looking much more at refineries.

This is the time of year that there's a lot of pressure on refineries. They're doing maintenance before the summer. They're transitioning over to summer gasoline. And in the background, demand is all going up at the same time and that puts a lot of pressure on refineries to finish that maintenance to get back online and boost production. And just like taking an old car into get an oil change, there can be issues at refineries that are unexpected that can lengthen the downtime.

So it's all about refineries as we make the transition to summer gasoline. Then in the summer, a lot of those pressures ease and then we look towards the Atlantic and hurricane season. But hopefully, we'll have a little bit more breathing room at the refining level this year as there have been increases in global refining capacity over the last couple of years.

AKIKO FUJITA: Well, Patrick, we always appreciate your perspective. Patrick De Haan GasBuddy head of petroleum analysis. Thanks so much for joining us today.

PATRICK DE HAAN: Thanks for having me.