Gas Prices Hit 10-Month Low: In a surprising turn of events, gas prices are plummeting just in time for the Thanksgiving travel surge. The national average for regular gasoline has seen a remarkable 55-cent decline in the past two months, reaching $3.33 per gallon, according to AAA. This goes beyond the typical seasonal drop, placing the national average at its lowest point in ten months. If this trend continues, Thanksgiving Day could see the cheapest gas prices since 2020 when the COVID-19 pandemic kept many Americans off the roads, bringing the national average down to just $2.12 per gallon.
A recent sharp downturn in the oil market, described by Wall Street as a “bloodbath,” suggests that gas prices may continue their descent in the coming days. GasBuddy forecasts a national average of $3.25 per gallon or lower by Thanksgiving Day, marking the lowest-priced Thanksgiving in three years. In contrast, last year’s holiday saw gas prices at $3.57 per gallon, capping off a year of notably high prices. In June 2022, the national average soared above $5 per gallon for the first time in history.
This drop in gas prices is expected to lead to a $1.2 billion reduction in American spending on gasoline during the Thanksgiving week compared to the previous year. Despite this significant decrease in gas prices, AAA projects that over 49 million Americans will hit the roads for Thanksgiving travel, a 1.7% increase from 2022.
The declining cost of living is gaining momentum, offering a welcome respite after two years of high inflation. Even the cost of a Thanksgiving Day meal is finally seeing a decrease. Gas prices remain a critical factor for Americans, and this substantial drop comes at a time when people are particularly attuned to prices ahead of the holiday season.
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Patrick De Haan, head of petroleum analysis at GasBuddy, notes, “This is pretty significant at a time of the year when a lot of Americans become more attuned to prices ahead of the holidays.”
While gas prices are still not as low as pre-COVID levels, the current downward trend reflects a shift in market dynamics. A few months ago, refinery outages and aggressive OPEC+ supply cuts drove oil prices to nearly $100 a barrel. However, concerns about demand, especially in China, and increased oil inventories have contributed to a sharp decline in oil prices.
US oil prices dropped by 5% in a single day, hitting a four-month low of $73.58 a barrel. Although crude rebounded above $74, it remains down more than 20% since late September. Analysts attribute the recent nosedive to a combination of hedge fund actions and fundamental factors, including signs of increased physical crude availability in the market.
While the current oversupply issue could change rapidly in the volatile oil market, for now, consumers are enjoying the benefits of sinking gas prices. However, external factors such as Saudi Arabia’s output decisions or supply disruptions linked to geopolitical events could potentially reverse this trend. With drivers in 10 states already paying less than $3 per gallon, GasBuddy’s Patrick De Haan believes this regional trend might soon become a national reality. “There is a growing reality that we could see sub-$3 gas before the end of the year,” he said.
Our Reader’s Queries
What months are gas prices the lowest?
Historically, the cost of gasoline tends to hit its lowest point in early February before gradually increasing and reaching its peak just before Memorial Day.
Will oil price drop in 2023?
The energy market is facing an uncertain future. Despite a slight increase in oil prices on Friday, the year is expected to end with a 10% decrease overall. Brent crude, which is the global benchmark, saw a 0.4% rise to $77.45 per barrel on Friday. The industry is eagerly anticipating what’s next for the energy market, as it navigates through these challenging times.
Why did oil prices fall in October?
In October, runs saw a decline from the previous month’s peak due to weakened industrial fuel demand and narrower refining margins. However, Chinese economic activity showed signs of improvement as industrial output grew at a faster pace and retail sales exceeded expectations.
Why do gas prices go down in the winter?
During the winter season, gas prices tend to decrease due to the reduced demand for fuel. According to Peter Krueger, the State Executive of the Nevada Petroleum Marketers Convenience Store Association, there are various factors that contribute to the varying prices of gas at different stations.