NEW YORK – Gasoline prices likely won’t set any records this summer, thanks to a recent drop in the price of oil.
The government on Tuesday slashed its forecast for average gas prices to $3.79 per gallon for the summer driving season. That’s down from an initial estimate of $3.95 and below 2008’s record average of $3.80.
The Energy Information Administration’s revised forecast is encouraging news for the economy. Some economists blame high pump prices for so-so consumer spending this year. They were also seen as a factor in the loss of 35,000 retail jobs in February and March.
Gasoline prices soared 20 percent from January to early April.
A few analysts warned drivers they could pay as much as $5 this summer, eclipsing the 2008 record of $4.11 per gallon.
Not anymore. The price of benchmark crude has dropped about $8 per barrel since early April. Retail gas prices have followed, falling 17 cents since reaching $3.936 on April 5.
“It’s almost like a tax cut,” said Jared Bernstein, a senior fellow at the Center for Budget and Policy Priorities. The EIA’s prediction means that motorists will spend about $10.7 billion less on gasoline than previously anticipated.
Last year, drivers paid an average of $3.71 per gallon from April to September, a period the government considers the peak driving season.
Gasoline will likely become less of a campaign issue. Republican presidential candidates hammered at President Barack Obama as prices jumped this year, even though presidents have little sway over pump prices. If gasoline gets even cheaper, experts think it will likely get knocked from the top tier of campaign issues.
“To not have gas prices nipping at your heels in an election is obviously favorable to the incumbent,” said Bernstein, who was formerly an economic adviser to Vice President Joe Biden.
It’s still a bit of a mixed bag for the president. Part of the reason oil prices have declined during the past month is sluggishness in the U.S. economy.
Europe helped sink oil prices as well. Some European countries are in recession, and election results in France and Greece over the weekend threaten to derail the eurozone’s plan for recovery.
Oil is down nearly 12 percent since peaking near $110 per barrel in February. As oil prices fall, it becomes cheaper for refineries to make gasoline, and some of the savings gets passed along in the form of cheaper pump prices.
Gasoline prices have tracked oil lower. The national average for gas is now $3.76 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. That’s 20 cents cheaper than a year ago.