The national average cost of a gallon of gas has fallen to the lowest level in years as gas prices have finally dropped under $3.
An average gallon of gas now costs $2.97 in the U.S., price tracking app GasBuddy said in a report Monday. The last time gas prices were this low? May 2021, more than 1,300 days ago.
Citing “seasonal weakness in demand” and oil prices under $70 per barrel, Patrick De Haan, the GasBuddy’s head of petroleum analysis, said in the report that drivers will likely see more affordable gas prices into the holiday season. He predicts “the national average potentially falling another 10 to 15 cents by Christmas.”
But don’t schedule your cross-country road trip just yet: Not all gas price trackers show gas dipping under $3 per gallon. On Wednesday, auto club AAA reported a national average of $3.02.
While prices are now below $2.50 at many of the country’s cheapest gas stations, drivers in the priciest states will be lucky to find gas prices under $3. Average prices are $4.48 in Hawaii, $4.29 in California and $3.91 in Washington. Regional differences in gas prices are influenced by state tax rates and access to gasoline supply.
Who gets the credit for lower gas prices?
The national average peaked at an all-time high in 2022 after Russia’s invasion of Ukraine and the resulting disruptions to global oil supply. Compared to that $5.01 record high for U.S. gas prices, the current average is now over $2 lower.
GasBuddy said other factors contributing to lower prices included improvements in U.S. refining capacity and the higher interest rates from the Federal Reserve, which are aimed at slowing inflation. Higher rates make borrowing money more expensive, which can slow economic activity and lead to less demand for oil (aka cheaper prices at the pump).
Average gas prices falling below $3 marks a significant milestone and offers more evidence that the worst of the country’s inflation problems are in the past.
In fact, lawmakers may attempt to score political points for lower pump prices this December. As noted in Axios, President-elect Donald Trump campaigned on bringing down gas prices, saying he could get the cost below $2 in speeches leading up to the November election.
However, De Haan said in a tweet that “Trump has absolutely nothing to do with prices today. None.”
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