Americans probably will be paying the lowest prices for gasoline since January 2011 by Christmas, with some drivers filling up for less than $3 a gallon.
Prices may drop 25 cents to 30 cents by Dec. 25, Michael Green, a spokesman in Washington for AAA, said in a telephone interview Sept. 27. The U.S. is heading toward October with the lowest seasonal pump prices since 2010. The average cost for a gallon of regular gasoline was $3.399 yesterday, the lowest level since Jan. 29, according to AAA, the nation’s largest motoring club.
A decline of 30 cents a gallon would save consumers an average of about $3.36 a week, or $174.72 a year, according to data from Michael Sivak of the University of Michigan’s Transportation Research Institute. Cheaper gas prices could bring relief to drivers as the U.S. economy recovers from the worst slump since the 1930s.
“Barring significant disruptions in supply or increased conflict in the Middle East that drives up oil costs, there likely will be a number of states that average less than $3 a gallon by Christmas,” Green said.
Pump prices have dropped every day this month after crude and gasoline futures retreated as easing Middle East tensions reduced concern that oil shipments from the region would be curtailed. Gasoline for October delivery fell 4.43 cents to $2.6319 a gallon today on the New York Mercantile Exchange and is down 13% in September.
Even as the unemployment rate declined to 7.3% in August, the lowest level since December 2008, the share of working-age people in the labor force, the so-called participation rate, was the lowest since August 1978, according to Labor Department data.
The 2013 Atlantic hurricane season, which runs from June 1 to Nov. 30 is shaping up as the first in almost two decades without a major storm. With the Atlantic full of dry air and storm-killing winds, there isn’t anything in sight that poses a threat to the U.S. or to oil and gas production areas in the Gulf of Mexico.
The absence of major storms in the Gulf of Mexico region, home to 12% of U.S. crude production and 45% of refining capacity is located, has allowed U.S. refiners to operate at the highest seasonal rate in EIA data going back to 1989. Plants processed 16.1 million barrels a day of crude and other feedstocks in the week ended Sept. 20.
The average distance driven by U.S. drivers is 12,492 miles a year, or about 240 miles per week, and the average fuel economy of all light-duty vehicles is 21.5 mpg, according to Sivak, a professor at the research institute.
The last time any state’s average fell below $3 was in January when eight states went below that amount. The lowest average in the lower-48 states was $3.093 a gallon in South Carolina. The highest average was in California where drivers paid $3.921.
Price declines may slow if crude futures don’t continue lower, Green said. West Texas Intermediate crude for November delivery dropped $1.12 to $101.75 a barrel today, and have dropped 5.5% this month.
“There’s a floor to how low gas prices can go given that crude prices are still above $100 a barrel,” Green said.