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Gas prices are dropping below $3 per gallon in some states

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Posted at 12:30 PM, Nov 08, 2023
and last updated 2023-11-08 15:02:51-05

Gas prices are plunging in many parts of the nation, just ahead of the holiday travel season.

Nationally, the average gas price declined to $3.44 last week, marking a 37-cent drop from a month ago, according to auto club AAA. Prices have plunged almost 10% in part because of flat demand for gasoline combined with a decline in the per-barrel cost of oil, the group added.

Gas prices are now below $3 a gallon in eight states, including Georgia at $2.93 and Mississippi and Texas at $2.94, according to fuel tracker GasBuddy. That's likely to continue given the market's dynamics, which means drivers in additional states are likely to see their local gas prices drop below $3 a gallon — providing some pocketbook relief as the holidays approach and more Americans take to the roads, according to experts.

"While the national average is now at its lowest since March, the decline is likely to continue for at least another couple of weeks, with California likely soon falling below $5, while more states fall under $3," Patrick De Haan, head of petroleum analysis at GasBuddy, said.

He noted that prices have fallen for seven consecutive weeks. "Millions of Americans already have access to $2.99 a gallon or cheaper, and I expect that number to continue to grow this week," he added.

The nation's most expensive gas prices are in California at $5.12 a gallon, Hawaii at $4.75 a gallon and Washington at $4.56, according to AAA.

Oil prices

Gas prices are primarily tied to the cost per barrel of crude oil, which is the raw material refineries need to create vehicle gasoline. West Texas Intermediate crude oil stood at $81.48 a barrel this week, down from $83.93 last week, while Brent crude is $85.65 per barrel, down from $89.04 last week, according to GasBuddy.

Demand for gasoline has fallen off, dropping to 8.69 million gallons per day in the final week of October compared with 8.94 million gallons in mid-October, according to the U.S. the Energy Information Administration

To be sure, gas prices often drop near year-end as gas stations switch to a winter-blend formula that's cheaper for refineries to produce. That's because the blend doesn't require workers to add the ingredients needed to keep gasoline from evaporating in higher temperatures during the summer months. That results in a price break at the pump.

Still, some energy experts had expected the ongoing Israel-Hama war to push oil prices skyward. However, "the tragic recent events in the Middle East are not, as yet, having any major impacts on oil prices," David Kelly, the chief global strategist at JP Morgan Asset Management, said in an analysts' note this week.

That's partly because Israel and the Palestinian territories are not significant oil producers on the global market, AAA said.