Cheap Gas Prices To Continue, Boosting Driving Demand | Edmunds

Cheap Gas Prices To Continue, Boosting Driving Demand

WASHINGTON — Cheap gasoline prices are boosting driving demand and "2016 remains poised to be a record year for both gasoline consumption and annual miles traveled," according to a new report from AAA.

While consumers are seeing slightly higher pump prices, today's average price of $2.14 per gallon is the lowest for this calendar date since 2009," AAA said on Monday.

"Consumers continue to save on the year, with today's average discounted by 39 cents per gallon compared to this same date last year," the motoring organization said.

Drivers are expected to pay some of the lowest gas prices for the summer months in more than a decade.

However, AAA notes the future is murky when it comes to fuel prices.

"The global oil market is at a crossroads and it is a mystery as to where oil prices might head going forward," it said. "Market fundamentals continue to point to extreme oversupply, though expectations of global demand growth or production cuts by major oil producers could influence crude oil prices higher."

The latest short-term outlook from the U.S. Energy Information Administration is bound to influence car shoppers' choices.

"During the 2016 April-through-September summer driving season, U.S. regular gasoline retail prices are forecast to average $2.04/gallon, compared with $2.63/gal last summer," it said. "For all of 2016, the forecast average price is $1.94/gal, which if realized would save the average U.S. household about $350 on gasoline in 2016 compared with 2015, with annual average motor fuel expenditures at the lowest level in 12 years."

Low gas prices are expected to continue to shift demand away from hybrid and electric vehicles.

An April analysis by found only 27.5 percent of all hybrid and electric vehicle trade-ins in 2016 have been applied to the purchase of another hybrid or EV. The rate is a precipitous drop from the 38.5 percent of hybrid and EV trade-ins in 2015.

Shoppers are trading in their hybrids and EVs for fuel-efficient compact crossovers, signaling that fuel economy is still somewhat of a priority.

The Edmunds study found that 16.4 percent of hybrid and EV trade-ins this year went toward compact crossovers. Only about 1.4 percent went toward a gas-guzzling purchase of a large SUV or crossover SUV.

The roll call of compact crossovers includes the Buick Encore, Ford Escape, Honda CR-V, Hyundai Santa Fe Sport, Mazda CX-5 and Toyota RAV4.

Edmunds says: These latest reports provide crucial information for car shoppers who are factoring pump prices into the equation.

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