1 of 3 | Gasoline prices are on a steady decline and at least one analyst says the national average could drop to around $3 per gallon by the end of the year. File Photo by John Angelillo/UPI |
License Photo
Dec. 7 (UPI) -- A steady decline in crude oil prices since the start of November has led to a U.S. national average retail price for gasoline that's lower than year-ago levels, industry data show.
Travel club AAA listed a retail average price of $3.35 for a gallon of regular unleaded gasoline, the same price it was at this time in 2021. That's the first time in nearly two years that prices at the pump dropped below year-prior levels and follows broader trends in the commodities markets.
The price for Brent crude oil, the global benchmark for the price of oil, was trading in the red on Wednesday, selling for around $78.30 per barrel during mid-day trading. Brent was trading closer to $98 per barrel at the beginning of November. Retail gasoline prices were around $3.80 at the time.
Patrick DeHaan, the senior petroleum analyst at price-watcher GasBuddy, said from Chicago this marks the fourth week in a row for a decline in retail gasoline prices and levels are now at their lowest since January, before Russian military forces invaded Ukraine.
"Every state has again seen average gasoline prices drop in the last week, and it remains very possible the national average could fall under $3 per gallon by Christmas," he said.
Crude oil prices rallied hard during early-morning trading on Monday in response to a decision from the Organization of the Petroleum Exporting Countries to trim collective production quotas, a new price cap on Russian oil and a European ban on waterborne crude oil imports from Russia.
The rally barely lasted until mid-day, however, as looming concerns about a recession overwhelmed supply-side issues. At the retail level, there are already a handful of states along the U.S. Gulf Coast selling gasoline below the $3 mark, with Texas setting the low-water mark at $2.77 per gallon.
California has the highest price in the continental United States at $4.66 per gallon, prompting Gov. Gavin Newsom to propose legislation that would impose penalties on energy companies for not returning record-level profits to the consumer.
But apart from refinery and transportation costs, along with state-level taxes, it's the price of crude oil that largely determines what consumers see at the pump. The federal government expects the price of Brent crude oil to fall from an average of $101.48 this year to $92.36 in 2023.
Retail gasoline prices, meanwhile, should clock in at $3.99 for the full-year average for 2022, but that too dips next year, to around $3.50 per gallon.