WASHINGTON — Gas prices are predicted to hit a seven-year low of $1.90 a gallon in February, before rising in the spring, according to a new short-term energy outlook by the U.S. Energy Information Administration.
The drop in pump prices is expected to further boost truck and SUV sales, as gas prices become a non-issue for most car shoppers.
Edmunds.com notes that light trucks — including pickups and SUVs — have outsold cars for more than two years, with no signs of slowing down.
The price of U.S. retail regular gasoline is forecast to average $2.03 a gallon in 2016 and $2.21 a gallon in 2017, compared with $2.43 a gallon in 2015, the U.S. EIA outlook said. This is the first edition of the outlook to include forecasts for 2017, a critical piece of information for car shoppers.
Another wild card in the gas-price forecast is the impact of Iran, which is poised to become a major player in world oil markets.
Iran's petroleum production is expected to increase as sanctions are lifted, the U.S. EIA said.
GasBuddy reported that some stations in Houghton Lake, Michigan were briefly selling gasoline "for a mere 47 cents per gallon" last weekend.
"The price war lasted several hours and led to police directing traffic and hour-long lines to fuel," wrote Patrick DeHaan, senior petroleum analyst at GasBuddy, in a blog post.
The federal government said the decline in gas prices since 2014 saved the average American household $700 in 2015, which provides a significant boost in discretionary income.
The AAA Daily Fuel Gauge Report on Tuesday pegged the average price for a gallon of unleaded gasoline at $1.88, compared to $2.06 a year ago.
Edmunds says: Expect falling gas prices to continue to fuel the thirst for trucks and SUVs.