In a gift to American shoppers this holiday season, gasoline prices have dropped for 61 consecutive days after getting dangerously close to $4 a gallon in September.
The average price for a gallon of regular gas stood at $3.25 a gallon on Tuesday, according to AAA. That’s down five cents from a week ago and 26 cents from a month ago.
Gas prices have now fallen every day since the peak on September 18, AAA data shows. The streak is a victory for consumers, saving them extra cash just in time for the crucial holiday shopping season.
Americans are particularly sensitive to shifts in prices at the pump as they are highly visible and largely unavoidable.
“Gasoline prices are so in-your-face. This is a clear tailwind for consumer spending,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service.
Millions of Americans hitting the road on Thanksgiving Day were greeted by the cheapest gas price for the holiday since 2020, when many people couldn’t take advantage of them because of Covid-19.
However, it’s normal for gas prices to cool off once the summer driving season ends because demand drops. There was an even longer streak of 98 days of falling prices last year after gasoline hit a record of $5.02 a gallon in June 2022. That was the second-longest streak on record going back to 2005.
But what’s significant today is the magnitude of the drop — and how it comes in the face of a series of threats that suggested the opposite could happen.
Gas prices are now down 63 cents since hitting $3.88 in September. That’s despite the Israel-Hamas war, which raised the specter of a regional conflict that could disrupt the flow of oil from the Strait of Hormuz or interrupt supply from Iran. And that’s not to mention Russia’s protracted war on Ukraine and its aggressive supply cuts alongside Saudi Arabia.
Yet oil prices — the main driver of retail pump prices — also have tumbled about 20% since briefly topping $95 a barrel on September 28. US crude fell nearly 1% on Monday to close at $74.86 a barrel before rebounding to nearly $76 on Tuesday.
Fears of supply disruptions in the Middle East have not borne out, forcing the oil market to focus instead on signs of oversupply and weak demand in China.
Oil continued to tumble last week after OPEC and its allies, known as OPEC+, postponed a meeting until November 30 without providing a reason. The delay is being viewed as a sign of disagreement within the producer group about what to do next.
“This is a make-or-break OPEC+ meeting,” said Kloza. “This meeting reminds me a lot of the November 2014 meeting during which the Saudis opened the spigots and created one of the biggest price drops in our lifetimes, other than during Covid.”
Like other analysts, Kloza expects OPEC+ will roll over existing quotas through the first quarter of 2024. But some argue Saudi Arabia will push through even deeper production cuts to offset rising non-OPEC supply, including record-setting production in the United States.
No matter the reason, gas prices are falling around the country.
There are now 15 states averaging $3 or less for a gallon of gas, including Wisconsin, Ohio and South Carolina, according to AAA.
But, as Kloza notes, the average price can be misleading because it’s inflated by high-cost gas states like Hawaii, Washington and California (though even in California prices have dropped by 43 cents over the past month to $4.88 a gallon).
The median price, which can give a better sense of what most of the country is actually paying, has fallen to $3.06 a gallon, according to OPIS. That’s down from $3.40 a year ago. OPIS says the most common price is now $2.999.
There are now more than 20,000 gas stations selling gas at $2.75 per gallon or less, according to GasBuddy.
Kloza expects pump prices to continue falling, for now at least.
“It’s going to be very, very difficult for gasoline prices to rally over the next 60 days,” Kloza said. “This period of pretty serious disinflation is probably going to continue until around the end of the year.”
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