Gas prices are below $2 a gallon in more than half the country due to low crude prices.
The price of crude oil remains under pressure, tamping down the price of gasoline on the eve of the Thanksgiving holiday to the lowest level since 2008 when the U.S. economy was still reeling from the financial crisis.
With some 42 million Americans are expected to take a road trip this Thanksgiving, the retail price of gasoline has fallen steadily through November for a total savings of 15 cents per gallon and the national average remains poised to fall below the $2 per gallon benchmark by the Christmas holiday, according to AAA.
More than half of U.S. stations are selling gas for less than $2 per gallon. The national average price of $2.07 per gallon represents a savings of nine cents per gallon versus one week ago, and 14 cents per gallon on the month. Significant yearly savings persist and pump prices are down 75 cents per gallon compared to this same date last year.
“The pump price may well continue dropping during the rest of November and into December,” the report said, citing pressure from “abundant” supplies and higher run-rates at U.S. refineries at the end of the seasonal maintenance period.
“Lower costs have been passed along the supply chain, and refiners were also “sacrificing some of their gasoline margin,” the Lundberg survey said.
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Pump prices are discounted 75 cents per gallon or more in 26 states, and drivers in Alaska and Hawaii, where prices have dropped $1.08 per gallon, are saving more than $1 per gallon year-over-year.
Crude oil supply from a number of production countries, including Russia and Saudi Arabia, is expected to sustain the global oil market’s current oversupply and keep market fundamentals bearish in the near term. Projections of slower than expected economic growth from China, combined with the impact of a strengthening U.S. dollar, are also likely to keep the market out of balance and put a ceiling on global oil prices.
The latest data from the U.S. Energy Information Administration points to crude oil inventories being up more than 100 million barrels from this time last year. Domestic inventories are nearing all-time record levels, which contributed to West Texas Intermediate falling temporarily below $40 per barrel last week.
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Demand for gasoline typically declines during the month of November, and barring any unexpected disruptions in supply, the national average is expected to move lower leading into 2016.
As a result of more supply entering the regional market, the largest weekly and monthly declines in the price at the pump are localized to this region and drivers in Wisconsin, Michigan, Illinois and Indiana are benefitting from noticeable savings in the price of retail gasoline as the maintenance season draws to a close at regional refineries.
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The list of states with retail averages below $2 per gallon has added seven new members since one week ago, for a total of 18 states. Pump prices have moved markedly lower in the Midwest week-over-week, and Indiana at $1.82 per gallon, Ohio at $1.83 per gallon and Oklahoma at $1.85 per gallon edged out Alabama at $1.85 per gallon and South Carolina at $1.85 as the nation’s least expensive markets for gasoline.