New York (CNN Business) — Much like the skies, the roads will be busy this Memorial Day weekend as Americans celebrate the unofficial start of summer.
More than 37 million people are expected to hit the roads this holiday weekend, up 6% from a year ago, according to AAA. Despite rising road travel, the cost of road trips is easing. Drivers across the country will be greeted by gas prices much cheaper than a year ago.
The national average for regular gasoline stands at $3.57 a gallon as of Friday, according to AAA.
That’s up from wintertime lows — but down by more than $1 from the year-ago average of $4.60, which was also the national average on the Friday before last Memorial Day.
GasBuddy told CNN that consumer spending on gasoline will likely plunge by $1.6 billion during the four-day weekend, compared with last year. Overall, oil supply has improved, including in the United States where annual oil output is projected to hit an all-time high.
So, today’s gas prices are not cheap historically. But they’re still miles away from the record high of $5.02 a gallon last June.
“Those who waited to take a road trip this summer are being rewarded with big savings on gasoline,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
It’s across the board: Drivers in all 50 states are experiencing cheaper gas prices this holiday weekend, including sharp declines in California ($1.31), Alaska ($1.30), New York ($1.25), New Jersey ($1.24) and Florida ($1.22), according to GasBuddy.
Why gas is cheaper
It’s important to note that even though gas prices have fallen sharply over the past year, they were lower in 2021 and especially 2020 when Covid-19 shut the economy down.
There are a variety of reasons for the gas price decline — and not all of them are positive.
The central factor is that oil prices, which are the main driver of retail gas prices, are down. Trading at about $72 a barrel on Friday, US oil is 37% cheaper than a year ago.
On the positive side, at the same time US oil output is up, Russia’s oil supply has also held up much better than feared despite the war in Ukraine and sanctions from the West.
But the drop in oil and gasoline prices also reflects concerns about the Federal Reserve’s massive interest rate hikes and the risk of a recession hitting the United States.
Will it last?
Looking ahead, GasBuddy’s De Haan now sees just a one in three chance that the national average for regular gas will hit $4 a gallon this summer. That’s down from a 2 in 3 chances back in January.
The key risks to that increasingly optimistic outlook include a hurricane that disrupts Gulf Coast refineries and a stronger-than-expected economy that causes fuel demand to overwhelm supply.
For now, gas prices are much lower than a year ago, contributing to easing inflation across the economy.
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