Thanksgiving gas prices could be the lowest in years - if you adjust for inflation. But consumers are still on edge.

By Myra P. Saefong

Inflation-adjusted Thanksgiving prices are expected to be at their lowest since the pandemic

The national average price for a gallon of gasoline was $3.032 on Monday, according to GasBuddy.

U.S. retail gasoline prices haven't budged since last Thanksgiving, providing households a bit more breathing room from inflation that's still too high for the Federal Reserve's liking.

The fuel's affordability for drivers, however, has improved in the past 12 months, with its inflation-adjusted price at the pump likely to reach its lowest Thanksgiving level since the COVID-19 pandemic, when crude-oil futures famously collapsed to $0 and lower.

That's one less worry for consumers who continue to fret over rising food prices, though economic uncertainty may keep more people off the roads this holiday week.

Most Americans - 74% of respondents to a GasBuddy survey - said that gas prices this year have had no effect on their Thanksgiving travel plans. That's up from about 56% last year.

If you look at gas prices, wages and inflation, the price for the fuel is "pretty cheap," said Patrick De Haan, head of petroleum analysis at GasBuddy. In that context, gas prices are not an issue for Thanksgiving this year, he said.

On Thanksgiving Day this week, fuel-up prices at the pump are expected to average $3.02 a gallon. That's in line with the average from last year, according to GasBuddy.

Accounting for the effects of inflation over time, going back to 2005, it's even cheaper: De Haan noted that Americans are likely to pay the lowest inflation-adjusted price for gasoline since the COVID-19 pandemic in 2020.

Inflation-adjusted prices at holiday time in 2020 averaged $2.63. Excluding that year, this year will likely see the lowest inflation-adjusted Thanksgiving gas price since 2016, when it averaged $2.84, GasBuddy data show.

Travel and the economy

However, fewer people are expected to travel by car this Thanksgiving, according to GasBuddy. Its travel survey shows that 60% of Americans plan to take a road trip, down from 72% last year - and that's despite stable fuel prices.

AAA forecasts that at least 73 million people will travel by car for the Thanksgiving holiday, which is 1.3 million more than last year.

As to what's behind the expected drop in car travel, De Haan said it doesn't appear to be attributable to "economic panic," but more likely "economic uncertainty," based on the responses he's seen to the GasBuddy survey.

People are a little bit on edge when it comes to making their Thanksgiving plans because of layoffs this year, anxiety about the economy and the recent government shutdown, said De Haan. The University of Michigan's consumer-sentiment index fell to 50.3 in a preliminary November reading - the lowest level since June 2022, when the reading was the lowest on record.

Gas prices

De Haan said he would have expected national-average gasoline prices to have fallen below $3 a gallon by now. The average was at $3.032 as of Monday afternoon, GasBuddy data show. That's down 5.6 cents a gallon from the previous week, but up 2.2 cents from a year ago.

There's been a higher-than-usual number of refinery issues developing, according to De Haan - especially on the West Coast with the loss of the Phillips 66 refinery in Los Angeles. The Olympic Pipeline, which is a major Pacific Northwest pipeline that transports gasoline and other fuels, also has been shut down.

Refinery-maintenance season, however, is wrapping up, and refinery utilization is picking back up, noted De Haan. The Energy Information Administration pegged utilization at 90% for the week ended Nov. 14.

As such, the national average for gasoline prices is likely to fall below the $3 mark, and it could stay there for a good part of the rest of the year "if everything goes well," De Haan said.

Even so, he pegs the odds of $2-a-gallon gasoline as a national average at one in a million.

The only reason the U.S. saw sub-$2 gas during President Donald Trump's first term in the White House was because of the pandemic, De Haan said, and reaching that price level again would require some sort of "major shift [in the market] that's completely a shock."

Trump in late October predicted that gas prices would soon drop to $2, according to news reports.

"Americans in over half of all U.S. states are paying less than $3 per gallon," White House spokeswoman Taylor Rogers told MarketWatch in an email, when asked for a comment on gasoline prices. Rogers blamed the Biden administration for higher gas prices in California and some other Democratic-governed states.

Some individual gas stations may sell gas at under $2 on and off for the next three months - maybe in Texas or Oklahoma - and there are some stations in Colorado selling gas below $2, De Haan said.

He added that, while a majority of American drivers is going to see gas prices trending lower in the weeks ahead, most are not going to see anywhere near sub-$2 prices.

-Myra P. Saefong

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