‘Tis the season for gas prices to fall, for a change.
Holiday shoppers — and pretty much all other gas buyers — have been happy to find a little less money going toward filling up the tank.
According to AAA spokesman Michael Green, Americans have saved about $250 million per day as gas prices have fallen below $3 per gallon in many states.
But will the price drops last?
First, a few things about what goes into the price of gas.
Gas prices also are seasonal with more demand and more expensive blends made in the summer to increase prices, so gas prices naturally rise in the spring and begin to fall in autumn.
Gas prices are far above their national peak in 2008. Hover over the states to see how today’s state-average prices for one gallon of unleaded gasoline compare to states at the time of the national peak.
But gas prices are still well above the lowest prices the nation has seen since 2000. To see that data, hover over the maps below.
“Chances are if you look at gasoline fundamentals, we’ll see prices in the spring rise back to levels that most people don’t want to pay,” he said.
This drop, however, is caused by more than the natural cycle.
Green said about two-thirds of the price of gas comes from the price of crude oil, which has tumbled from more than $110 per barrel to just more than $80 per barrel in the last year.
The price drop has been caused by a few things, Green said. Concerns about the global economy have slowed demand. New oil production, including some in the United States, has increased supply.
OPEC meets on Thanksgiving Day to decide oil production levels, and there is a chance OPEC could accept lower prices to maintain market share.
“OPEC is very concerned about new oil production specifically in the United States,” Green said. “They believe if they lower their price of crude oil, they can maintain market share and have a competitive advantage against that new production.”
The goal would be to knock out U.S. production and then decrease supply again to boost prices for the long-term. Oil production is not a start-and-stop business, so any decision made by U.S. producers could have lasting impacts.
“You can’t just go in and turn it on and off,” Green said. “If you turn off that production, it takes a while to bring it back.”
Complicating the matter is that experts don’t know for sure how low the price would need to go for U.S. producers to cut back plans or whether OPEC’s decisions will be economic or geopolitical, Green said.
“There seems to be a lot of factors right now,” he said.