Excellent news, drivers: Gas prices have a shot at dipping below $3 for the primary time in years.
The national average for a gallon of gas is currently $3.30, having decreased 17 cents prior to now month, in line with AAA. And before the tip of 2024, prices could drop even further, in line with analysts including Andy Lipow, president of Lipow Oil Associates.
“I’m expecting that gasoline prices are going to fall one other 15 to twenty cents per gallon over the following three weeks,” he says. “There’s possibility that the typical national retail price of gas will hit $3 per gallon by the tip of the yr.”
The last time the national average was below $3 was in May 2021, in line with AAA.
Now, oil prices are all the way down to around their lowest level in a yr, paving the best way for cheaper gasoline.
Crude oil makes up about half of what we pay for a gallon of gas, and oil has been trading at lower levels — under $70 per barrel, per the West Texas Intermediate measure. Key aspects include weakness in Chinese manufacturing, which could signal less demand for oil, and restoration of oil exports in Libya, Lipow says. (Political disagreements between rival parties in Libya led to a halt of production and exports temporarily affecting global oil supply, but the problems are reportedly being resolved.)
Will gas prices fall below $3?
While cautioning that gas price forecasts are subject to many variables, Denton Cinquegrana, chief oil analyst on the Oil Price Information Service, says the drop in the value of oil is a welcome development for drivers.
“You have already got 10 states with a mean below $3 per gallon,” he says, adding that five more states could easily be below $3 a gallon by the tip of the month.
States are transitioning from summer-grade to winter-grade gasoline, a distinct mix that is simpler (and cheaper) to make. Gas prices often fall around this time of yr when the switch happens.
Moreover, low demand from drivers has contributed to recent price declines, in line with AAA. The auto club reports that gas prices are 51 cents cheaper than a yr ago, and AAA spokesperson Andrew Gross wrote in a blog post Thursday that “this trend of falling pump prices will likely proceed.”
Despite the positive signals, cheaper gas prices are removed from guaranteed.
In June, OPEC+ (the Organization of Petroleum Exporting Countries plus its allies) indicated intentions to revive oil output after previously cutting production. Nonetheless, with oil prices at their current levels, OPEC+ could potentially delay that move, keeping supply lower and putting upward pressure on gas prices.
The opposite major risk could be a hurricane impacting refining capability. The height of hurricane season within the Atlantic Ocean is officially Tuesday.
“To this point, the hurricane season has been a little bit of a dud, and knock on wood that continues,” Cinquegrana says. “[But] that is something that would actually deter the forecast for prices to drop below $3 a gallon.”
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