Gas Prices Set to Reach Three-Year Low for Labor Day Weekend Travel

Gas prices are set to reach a three-year low as consumers gear up for the Labor Day weekend, according to fuel savings platform GasBuddy.

In its forecast for Labor Day travel, GasBuddy said the average price of gas will likely continue on a downward trend, falling to $3.27 per gallon on the holiday. That will mark the lowest Labor Day price since 2021.

“It’s been a great summer for motorists to hit the road with gas prices generally lower than last year,” said Patrick De Haan, head of petroleum analysis at GasBuddy, in a statement. “But heading into Labor Day, the year-on-year gap has grown substantially thanks to few refinery outages or heatwaves impacting refineries this month.”

The price estimate is 50 cents per gallon, or 13 percent, lower than last year’s $3.77. In all, this will save Americans $750 million across the Friday to Monday travel period.

Nationally, gas prices hit their peak, at $3.69 per gallon, in April, but since then they have been coming down.

Regionally, consumers will feel different levels of price pressure relief. On the West Coast, average prices have come down 65 cents since a year ago, with Washington seeing an 87-cent difference.

Roughly a third of Americans are planning on taking road trips this Labor Day weekend, and the lower gas prices could bring some moderate savings, compared with years past.

Because there are no threats to major gasoline and diesel refineries, Americans may be able to avoid a late-summer gas price spike, De Haan said.

“While many Americans may wish summer could last forever, the good news is we’re seeing perhaps the best opportunity in years for the national average to fall below $3 per gallon,” he said.

“As we get closer to Thanksgiving, we should see tens of thousands of stations ultimately fall back below that level, all thanks to falling seasonal demand and cheaper winter gasoline, which is right around the corner,” he said.

Typically, gas stations start transitioning to their winter blend gas in mid-September. That helps reduce gas prices across the board, although prices still vary significantly across the country.

Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, said a large part of the reason prices are lower is reduced demand.

“Now that the sudden post-pandemic surge in travel and a return to the office is out of the way, we’re starting to see a new economy emerge, and it’s not as reliant on gasoline,” Beene told Newsweek. “A few things are leading to less demand.”

For one, more jobs in this post-pandemic period offer remote and hybrid options, he said. And the rise of electric vehicles has meant a shift for the gasoline economy.

“In many major markets, car buyers are choosing electric over gasoline-based automobiles in recent years,” Beene said. “The American consumer also feels tapped out financially, and that leads to fewer vehicles on the road for recreational reasons. Add in stagnant oil prices globally and you have the perfect recipe for falling prices at the pump.”

Overall, U.S. oil production is booming, and that surplus is putting downward pressure on prices, said Michael Ryan, a finance expert and founder of MichaelRyanMoney.com.

“It’s like when there’s an oversupply of tomatoes at the farmers market—prices have to come down to move the product,” Ryan told Newsweek, adding that seasonality plays a role.

“As summer winds down, so does our collective urge to hit the road. Demand drops, and so do prices,” he said while adding that the three-year low is a “double-edged sword.”

“It might also signal some economic headwinds,” Ryan said. “Weaker global demand could be contributing to these low prices. It’s a reminder: Our economy doesn’t exist in a vacuum.”