American will pay $2.04 per gallon of gasoline this summer, according to analysis published Wednesday by the Energy Information Administration (EIA).
EIA predicts gas prices from April to September will be 59 cents per gallon lower than the price last summer. The agency predicts this summer will have the cheapest average gas price since 2004.
Throughout all of 2016, the average U.S. gas price will be $1.94 per gallon.
Source: Energy Information Administration
Gas is cheap largely due to increased U.S. oil production and weak economic growth in China. In America, hydraulic fracturing and horizontal drilling have unleashed vast oil reserves and helped energy prices drop 41 percent over the course of 2015, according to the EIA.
Wednesday’s EIA analysis estimates the average American household will spend about $350 less on gasoline in 2016 than it did in 2015 and about $1,000 less than it did in 2014.
Americans spent $370 billion on gasoline in 2014, when retail gasoline prices averaged more than $3 per gallon. The enormous amounts of money spent on gas mean even small decreases in price are equivalent to huge savings. The huge drop since 2014 is equivalent to $102 billion in savings for the country. The American household likely saved $700 to $750 at the pump in 2015 compared to 2014.
Most economists agree low prices at the pump are enormously beneficial to American households, which tend to use cash not spent on gasoline to save more or pay down debt. Others claim the extra money is spent on luxury goods, such as dining out at restaurants. Cheap gasoline disproportionately helps poorer families and other lower-income groups because fuel costs eat up a larger share of their more limited earnings.
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