National Average Could Test $2.50 By Christmas

The national average price for regular unleaded gasoline could test $2.50 by Christmas, and likely will fall to the lowest level since 2009 in a matter of days. Today’s average of $2.66 per gallon is the least expensive since Feb. 23, 2010. As crude oil costs continue to slide, gas prices are poised to fall even further in the next several weeks. The price at the pump has already tumbled by more than one dollar ($1.03) since the 2014 peak of $3.70 per gallon in April. The national average has dropped a dime from one week ago, 27 cents from one month ago and 60 cents per gallon from the same date last year.

The average price for retail gasoline historically declines from fall into winter due to a number of factors including decreased demand. Consumers can expect to see the price at the pump tick lower as we approach the New Year, however, crude oil would have to fall by another $25 to $30 per barrel to cause the national average to drop below the $2.00 per gallon threshold this winter, which remains unlikely. The price of oil accounts for approximately two-thirds of the price at the pump, and a $10 per barrel drop in the price of crude oil results in about a 25-cent drop in retail prices for motorists.

Plentiful global crude oil supplies continue to be a primary contributing factor to falling averages nationwide. Forty-six states and Washington, D.C. are reporting prices below the $3.00 per gallon threshold. More than half (six) of the nation’s 10 most expensive markets are registering averages less than this benchmark, including Vermont and California where motorists are paying less than $3.00 per gallon for the first time since 2010. The nation’s most expensive markets are Hawaii ($3.78) and Alaska ($3.44), followed by the Northeastern states of New York ($3.08) and Connecticut ($3.02). Consumers in Missouri are paying the least per gallon to refuel their vehicles at $2.37 per gallon. While it is still unlikely that any state’s average will fall below $2.00 per gallon, there are individual stations in these cheapest markets where motorists can currently fill up for less than $2.00.

Locally, South Jersey drivers are paying an average of $2.56 for a gallon of unleaded gas. This is 9 cents less than one week ago ($2.65), 15 cents than one month ago ($2.71), and 69 cents less one year ago.

Week-over-week, the price of gasoline is down by a nickel or more in every state and Washington, D.C. The Midwestern states of Michigan (-19 cents), Indiana (-16 cents) and Ohio (-16 cents) are posting the most dramatic savings over this period, and lead the pack of 19 states where motorists are experiencing a weekly discount of a dime or more per gallon.

With the exception of Delaware (-9 cents), the average price at the pump has tumbled more than a dime in every state and Washington, D.C. over the past month. Motorists in twenty-seven states are enjoying month-over-month savings of a quarter or more with the largest savings in South Dakota (-45 cents), Oklahoma (-45 cents), Missouri (-41 cents) and Minnesota (-41 cents).

Yearly comparisons continue to reflect the most extreme drops in the price at the pump. Not only is the average price is down in every state and Washington, D.C. from this date in 2013, but consumers in 46 states and the District of Columbia are saving more than a quarter per gallon, and 35 states and D.C. are saving 50 cents or more per gallon.

Global oil markets are still struggling to find a bottom since the Organization of Petroleum Exporting Countries’(OPEC) decision to sustain production levels. Brent Crude and West Texas Intermediate reached their lowest levels in five years on Friday and this continues to mean cheaper gasoline at the pump for drivers. In an attempt to protect its share of the global market, Saudi Arabia, OPEC’s second largest member, is sustaining its recent price cuts and is offering barrels of oil at prices not seen in at least 14 years. This move could possibly put pressure on U.S. crude production, which is at its highest level in 30 years, and has been a leading factor for the global oil market’s increase in supply. The new oil production that has come online in the U.S. in recent years is generally understood to cost more to get out of the ground than oil produced in Saudi Arabia. If oil prices continue to fall, this more expensive U.S. production could stop being profitable, which could take some production offline until prices increase again. At the close of formal trading on Friday, West Texas Intermediate (WTI) settled below $66 per barrel for the first time since 2009, down 97 cents at $65.83 per barrel.