Driving Costs Hit 6-Year Low — but Will It Last?

Although the cost of hitting the open road has been falling, the trend may be about to reverse.

Driving Costs Hit 6-Year Low — but Will It Last? Photo (cc) by Nicholas_T

As Memorial Day approaches, AAA reports that the cost of driving has fallen to a six-year low, thanks to sliding gas prices. That’s the good news.

The bad news is that you could be paying more for gas by Memorial Day.

According to AAA’s 2016 Your Driving Costs study, the annual cost of driving is now $8,558 per year, or 57 cents per mile, for the average sedan.

Although almost every factor affecting the cost of driving has increased — such as maintenance and insurance — gas prices have decreased more than enough to offset the other factors.

The annual cost of driving for specific vehicle types is now:

  • For small sedans: $6,579 per year ($0.4386 per mile)
  • For medium sedans: $8,604 per year ($0.5736 per mile)
  • For large sedans: $10,492 per year ($0.6994 per mile)
  • For SUVs (4WD): $10,255 per year ($0.6837 per mile)
  • For minivans: $9,262 per year ($0.6175 per mile)

But while gas prices should remain lower than they have in recent years, they have started to tick upward.

At the end of last month, AAA reported that the national average price of gas had surpassed $2 per gallon for the first time this year. It had risen 21 days in a row up to the end of the month.

The nonprofit organization has also predicted prices could rise another 25 cents per gallon by Memorial Day. Four factors are expected to cause the increase:

  • Higher oil costs: They’ve increased by more than $10 per barrel since early February, making it more expensive to produce gas.
  • Increased demand: Demand has increased this spring as the weather has been warming up.
  • Refinery maintenance: Refineries conduct maintenance to prepare for the summer driving season, and they produce less fuel while undergoing maintenance, which can lead to higher gas prices.
  • The switchover to summer-blend gas: U.S. Environmental Protection Agency mandates require gas stations in some parts of the country to sell summer-blend gas from June 1 to September 15 for air-quality reasons. Refineries start producing summer-blend gas by April 1, and it costs more to produce.

Will you be driving out of town for the Memorial Day weekend? Let us know whether gas prices will affect your destination choice by commenting below or on Facebook.

Karla Bowsher
Karla Bowsher
I’m a freelance journalist and former newspaper reporter who has covered both personal and public finance. I've worked for a top 50 major metro daily and a community newspaper as well as ... More

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