Not since 2004 have gas prices been this low, an outcome of a glut of oil on the market from producers amidst a slowdown of demand from China. No surprise that driving is at all-time hime. Prices are expected to drop below $2 per gallon by Christmas.
"Average regular unleaded will cost the least for the Labor Day break since 2004, AAA says," writes Paul Davidson for USA TODAY. Average gas prices on Saturday were $2.41 a gallon, down a dollar from Labor Day last year.
The lower costs are coming despite what AAA expects to be the busiest Labor Day weekend for motorists since 2008, with 30.4 million travelers hitting the road, up 1.1% from a year ago.
Come December, today's gas prices might seem high. "We definitely believe gas will follow a downward trend for the remainder of the calendar year," says Gregg Laskowski, a senior petroleum analyst at gasbuddy.com.
Gas, he says, is likely to fall below $2 a gallon nationally by December.
Amanda Shapiro of The AAA Newsroom goes into detail on the cause of the drop in prices, its effect on driving, i.e., increase in vehicle miles traveled and consumer spending, and regional differences in gas prices.
Summer is the busiest time of the year for driving and millions of Americans are taking advantage of lower gas prices to travel more this year. New estimates by the Federal Highway Administration showed that U.S. driving topped 1.54 trillion miles in the first half of 2015, which was an all-time high. Increased driving results in higher fuel demand, which can lead to higher gas prices.
For a refreshing read on the 'new driving record,' read Streetsblog's interpretation posted here.
As for Californians paying $3.35 per gallon, that is "in part because ExxonMobil’s refinery in Torrance, Calif. is still not operating at normal levels," explains Shapiro. "The refinery experienced an explosion in the spring that sent gas prices in parts of California above $4 per gallon."
However, nothing is ever certain when it comes to gas prices. Other than refinery outages causing regional price increases, gas prices follow oil prices. When crude oil prices dipped below $40 a barrel as they briefly did last week, gas prices fall below $2 a gallon, notes Shapiro.
Despite the plummeting price of oil causing a cutback in drilling in the U.S., "domestic crude oil production remains nearly 13 percent higher than a year ago, and U.S. commercial supplies are about 27 percent higher than a year ago," writes Shapiro.
There is one down side of cheaper gas causing more Americans to hit the road: the expensive and deadly car crashes that inevitably will accompany it, as recent data has shown.
Read the full story: USA TODAY: Gas prices to be lowest for Labor Day in 11 years
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