Can gas prices go below $3? When would that happen?
According to various projections, the price per gallon of gasoline could to three dollars by late Autumn if current trends continue. What is behind it?
After reaching an all-time high in June, reaching $5.016 per gallon, gasoline prices continue with a large downward trend. According to various analysts, the price of fuel could drop to below three dollars, figures that had not been seen since before the Russian invasion of Ukraine.
For this Friday, August 18, the average of a gallon of gasoline in the United States is $3.918, according to the most recent update of the American Automobile Association . However, in the coming weeks, prices could be even lower though don’t expect it to fall below $3 in every state.
Oil price falling the reason behind the drop
Experts on the subject predict that gasoline prices could drop below three dollars at the end of September or beginning of October, if current trends continue.
“About 60 percent of what you pay at the pump is accounted for by the price of oil,” said AAA spokesman Andrew Gross, who writes the organization’s Monday gas report, “That is really the big factor.”
The price of fuel has been steadily dropping since the start of June, when a barrel of WTI Crude cost $121.40. Now, August 19, it costs $89.02; nearly a 33 percent drop. This is reflected by the cost at the pump.
According to Tom Kloza, the global head of energy analysis for the Oil Price Information Service (OPIS), $3 a gallon price could be in “quite a few areas” like the Gulf Coast states like Texas.
It is worth mentioning that analysts speak of a drop in average prices nationwide, so it should not be forgotten that there are states where fuel taxes are higher. In states such as in California, where the current average is $5.33, their average prices will also be dropping but are unlikely to cross the $3 threshold this year.
Other factors could come into play to damage supply.
“We still don’t know what Putin is going to do, or if a hurricane is going to hit the Gulf Coast,” Kloza said.
Among other factors that can influence the rise or fall of fuel is risk aversion due to the recession. This has been part of the reason behind the drop in price as consumers simply cannot afford to pay the rates.