According to GasBuddy, for the first time since March 25, 2009, the national average price of gasoline has dropped below $2 a gallon.
Currently over two-thirds of gas stations are selling gasoline at $1.99 or less, yet the national benchmark had previously failed to breach $2 a gallon as fuel prices have been stubbornly slow at dropping in the West and new refinery issues there may soon lead the national average back up.
For now, with the recent decline in crude oil prices continuing, the week long $2 barrier has finally been crossed.
It was not a matter of whether it could happen but when; various factors have pushed global crude oil prices consistently lower, fuel supply in much of the country has been higher and consumer demand has been unremarkable. There is more good news on the horizon for those who enjoy the low prices: many areas will see them stick around for a good portion of the winter.
Thirty states now have an average price below $2 and another five states: (MD, IL, NH, FL and UT) are poised to join the club within days as the momentum has brought their respective averages within a nickel of $2 a gallon.
Only 33 percent of the nation’s gas stations have prices over $2 a gallon and just three states have zero gas stations under that level: Hawaii, California and Nevada.
“Yesterday we saw the benchmark crude in the U.S. West Texas Intermediate crude oil slipped below $35 per barrel and that is certainly reflective of global inventories and production at lofty levels,” Patrick DeHaan, senior petroleum analyst for GasBuddy said. “The Organization of the Petroleum Exporting Countries inactions continue to benefit motorists with cheap gasoline prices, but consumers should be skeptical of some OPEC members seeking to capture market share by pressuring prices down to a point where some U.S. producers are forced offline by low prices. Nonetheless, for the vast majority of consumers the gasoline price decline is a blessing that provides a little extra cash when it’s most needed.”
How low will prices go?
“It’s likely that gasoline prices will eventually decline even further into early January as demand bottoms out, but, eventually the party comes to an end,” DeHaan added. “That’s because demand will begin to climb approaching the spring, as well as federal regulations that require refineries to shift from winter-blend gasoline to summer blend. Refinery maintenance also leads to capacity going offline- capacity that is relied boost supply just as demand is rising.
“And like clockwork, first-quarter retail prices tend to climb rapidly as this annual exercise tightens supply and consumer demand concurrently rises, but before that happens we might see the national average bottom out at $1.85,” he said.
GasBuddy projects that consumers will save $1.6 billion on gas over their year-end travels compared to last year.
According to the annual GasBuddy holiday travel survey, 88 percent of those heading out of town will be doing so by car, with a majority 66 percent driving at least 200 miles round trip.
It wasn’t that long ago when motorists were paying well over $3 per gallon during the winter months, a far cry from today’s national average of $2.01, which has risen after hitting $1.99.
Gas prices during the holidays haven’t been this cheap since 2008, when few Americans noticed the low prices amidst the Great Recession.
“It’s beginning to look a lot like Christmas in 2008” DeHaan said. “The extra savings and cheer will certainly spread as we close out the year. There has not been a better time in years for motorists to extend their trips and travel farther, as sub $2 per gallon gas can be found at almost 70% of stations in the country.”
The national average is likely to tick slightly higher throughout the busiest travel period of the year as prices have moved higher in the Great Lakes and continue to climb in California.
However, GasBuddy expects this upward trend to be temporary; lower prices will eventually hit pumps into the New Year as oil prices drift lower thanks to weakening demand for petroleum.