Gas Prices Plummet To 9-Month Low—But Will Likely Set Holiday Record High

Topline

Gas prices hit a nine-month low on Wednesday, dropping to their lowest mark since the beginning of a rapid spike in prices in February, although experts still believe they will hit a Thanksgiving Day record as millions of Americans get ready to hit the road.

Gas prices fell to a nine-month low this week.

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Key Facts

The national average for a gallon of gas dropped more than 13 cents from a week ago to $3.609, according to AAA, hitting their lowest point since Feb. 23.

Drivers in the Southeast can expect prices around $3, with the national average in Texas dropping to $2.951—making it the first state to fall under the $3 mark since January.

California’s gas—the most expensive in the country—has experienced the biggest decline from a month ago, with the price of a gallon of gas falling 71 cents as key oil refineries come back online after a string of maintenance-related shutdowns.

Experts also attribute the decline to slumping gas demand, which fell from 9.01 million barrels per day to 8.74 million barrels per day last week, according to the Energy Information Administration, AAA reported.

Contra

Even as prices fall, however, they’re still up 20 cents from a year ago, and $1 more than in 2019, according to AAA spokesperson Andrew Gross. They’re also 16 cents higher than the previous Thanksgiving Day record ($3.44 in 2012).

What To Watch For

Whether gas prices will continue to decline this winter. According to AAA, the two main drivers behind changes in prices are gas demand and the cost of crude oil—which is refined into gasoline. Although demand typically dips in the winter—a good indication for motorists looking to save a dollar—oil prices can be more volatile, with the global market remaining “murky,” GasBuddy head of petroleum analysis Patrick De Haan wrote. Last month, OPEC+ oil-producing countries decided to cut their production levels by 2 million barrels per day, prompting the Biden Administration to tap into the national Strategic Petroleum Reserve two weeks later, opening 14 million barrels for sale. Russia’s ongoing war in Ukraine and the Kremlin’s threats to halt oil supplies to Europe this summer has also disrupted the international energy market. The cost of oil accounts for 56% of the dollar figure drivers see at the pump, according to AAA.

Crucial Quote

“It’s not impossible that if oil markets hold here (with the Brent Crude Oil Continuous Contract trading around $85 per barrel and the West Texas Intermediate trading at $78.07), we could see a national average of $2.99 around Christmas,” De Haan wrote in a blog post.

Tangent

Gas demand has been on a downward trend for several months as the “days get shorter and the weather crummier,” according to AAA. The drop in demand can be explained, in part, by motorists tending to drive more often in warmer weather, according to the EIA. The big exception to the autumn price drop, however, is Thanksgiving. Nearly 49 million Americans (roughly one in seven) will be hitting the road between Wednesday and Sunday this week, an increase from 2021, according to AAA. Airlines are also seeing a boost in passengers this week to pre-Covid levels. More than 2.29 million passengers were screened at TSA checkpoints on Tuesday, above 2021 levels and just short of the 2.44 million screened that day in 2019, according to TSA data.