Gas prices have been falling steadily since June, and have just reached the lowest level for this time of the year since 2004.
According to the AAA Fuel Gauge Report, the average price for one gallon of unleaded fuel is $2.39, having therefore dropped to its lowest value since April. It is also more than $1 less than the asking price from last year. Moreover, this downward trend in the cost of regular gasoline is predicted to continue in the following weeks.
According to Amy Parmenter, AAA spokesperson, “Once the busy travel season comes to a close, there will be less of a demand, so barring any unforeseen disruptions, the price of gas is expected to fall even more quickly”.
It has been forecasted by the Energy Information Administration that the national average will decrease to $2.11 a gallon by the end of 2015, with prices falling below $2 in several states.
The decline in gas prices has been widespread throughout the country, just 4 states selling gas at prices above $3: Alaska, Nevada, California and Hawaii. At the other end of the spectrum, of the 130,000 gas stations in the U.S., around 5% now sell unleaded fuel at less than $2 a gallon.
The drop in gas prices has been a welcome change for car drivers, estimates showing that the average motorist has been making savings of approximately $50 a month thanks to the decline.
An explanation for the significant slump in gas prices is the fact that crude oil prices have also been plummeting in the last 6 years. A surge in oil pumping by the OPEC countries, combined with an increase in American shale production has led to an over-saturated market characterized by highly abundant petroleum supplies.
The significantly lower demand has caused oil prices to fall by 58% since last year’s values, and at the moment a barrel costs under $46. Crude oil accounts for around half the cost of a gallon of gasoline, so consequently U.S. drivers have benefited, by having to pay much less than before.
It has been estimated by the U.S. Federal Highway Administration that in the first semester of 2015, American motorists drove more than 1.5 trillion miles, which is a record high suggesting that people have been indeed taking advantage of this fall in prices.
On the other hand, this dramatic decline has been greatly detrimental to those employed in the oil & gas sector. According to outplacement firm Challenger , Gray & Christmas, there have been 86,405 job cuts directly related to the current oil crisis, since June 2014.
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