The Reason U.S. Gas Prices Are Plummeting
Gasoline prices in America vary drastically not only from year to year, but sometimes even every month.
And as of December 12, 2023, the average price for a gallon of gas in the US is wildly low at $3.137. Although many people will surely smile when they see that low price tag, many are wondering why this is happening now.
The Current Numbers
AAA recently reported that at $3.137, gas by the gallon is 9 cents lower than it was November, 2023, and the lowest it’s been all year.
They also noted that the gas supply companies are struggling to to sell barrels for any more than $70 a barrel.
AAA Explains Why Gas Prices Are so Low
According to AAA, there are essentially three reasons why gas prices are plummeting and why gas companies can’t get enough for their product: The weather, the time of year, and an increase in gas production.
First, because the El Niño weather pattern brought a warm winter to the globe this year, gas consumption is expected to drop by 7% since last winter. That means there is less demand and ample supply.
Gas Always Gets a Little Cheaper in the Fall
AAA also noted that “Historically, crude oil tends to drop nearly 30% from late September into early winter with gasoline prices trailing the play.”
So while it’s certainly exciting that gas prices are dropping quickly, it’s actually quite common for this occurrence in the late fall.
Most Importantly, Gas Production Is Up
Weather and time of year are playing their part in low gas prices, but the absolute most important reason why costs are so low is simply that there has been a significant increase in gas production, alongside a lowering demand.
It’s a simple case of economics: If there is too much of something, the value goes down.
OPEC Attempting to Raise Oil Prices Again Soon
OPEC, or The Organization of the Petroleum Exporting, works to ensure the co-operation of oil-producing countries around the world to maximize crude oil profits.
So for OPEC, the quickly falling gas prices are not a good thing, in fact, it means they need to get to work to stabilize the price of gas as soon as possible.
OPEC Plans to Cut Back on Supply
One of the major reasons why gas is so affordable right now is because supply is higher than demand, and OPEC plans to rectify that issue immediately.
They announced in early December 2023 that they plan to cut down gas production by 2 million barrels a day this month, as well as during the first quarter of 2024.
Why Do Gas Prices Vary by State?
Now, even though the national average is the lowest it’s been all year, the price of a gallon of gas still varies significantly by state.
And while that’s partially due to supply distances, operating costs, and retail competition, the main difference from state to state are the implemented gas taxes.
States With the Lowest Gas Prices
The states with the lowest gas taxes are typically the states with the most affordable gas. And as usual, Texas is leading the pack with the average gas price of only $2.60 per gallon.
Also in the list of top five states with the cheapest gas are Oklahoma ($2.68), Mississippi ($2.70), Missouri ($2.70), and Louisiana ($2.70).
States With the Highest Gas Prices
And it should come as no surprise that the most expensive gas in the country is being sold in California at $4.70 a gallon, nearly double what Texans pay for the same product.
Next is Hawaii at $4.70, then Washington with an average of $4.26, and Nevada at $4.02.
States With the Most Significant Change
While some states consistently sit in the list of either the most expensive or the most affordable gas prices, these states saw huge decreases in a very short period of time.
Indiana and Florida’s averages both dropped by 10 cents, Idaho and Utah by 11 cents, and the state of Colorado saw a 12 cent decrease last week.
It’s a Great Time to Be an American on the Road
AAA Spokesperson Andrew Gross explained, “More than half of all U.S. fuel locations have gasoline below $3 per gallon. By the end of the year, the national average may dip that low as well.”
Which among high costs of homes, groceries, and general cost of living, is quite the gift this holiday season.