Gasoline Falls Below $2 a Gallon for First Time in 6 Years
Just as Americans start to hit the road for the holidays, the average price of gasoline at the pump has dropped below $2 a gallon for the first time in more than six years as global oil supply continues to surge.
The average pump price fell to $1.999 a gallon at about 4 p.m. New York time on Dec. 19, according to data from GasBuddy Organization, a price tracker based in Gaithersburg, Maryland. That compares with an average price of $2.11 a month ago and $2.44 one year ago.
Low oil prices tied to overproduction and to lower seasonal demand are 鈥渢he main catalyst鈥 for the decline, said Patrick DeHaan, a senior petroleum analyst at GasBuddy, in a phone interview. 鈥淎merica is the world鈥檚 largest oil consumer, and in the winter months demand is reduced,鈥 he said.
Consumers are benefiting from a 68% drop in West Texas Intermediate crude over the past 18 months. That has boosted refiners鈥 profit margins, encouraging them to produce record amounts of fuel. Prices are poised to remain depressed into next year after the Organization of Petroleum Exporting Countries refused to limit its output. WTI dropped to $34.73 a barrel on Dec. 18, the lowest since February 2009.
The average price of regular gasoline fell 4.02 cents to $2.062 a gallon on Dec. 18 from Dec. 4, the lowest since April 24, 2009, Trilby Lundberg, president of Lundberg Survey Inc., said Dec. 20. Her survey gives greater weight to prices in higher-consuming states such as California than lower-consuming areas such as Montana, she said.
Prices may drop 鈥渁 couple of more pennies鈥 if crude prices stay where they are, Lundberg said.
U.S. refineries produced 9.83 million barrels a day of the motor fuel in November, 2.3% higher than a year earlier, the American Petroleum Institute said Dec. 17.
Americans have saved about $100 billion on fuel this year, which comes to more than $350 a person, according to Michael Green, a spokesman in Washington for AAA. The drop in gasoline prices has coincided with an increase in demand, which is this highest for this time of year since 2007, Energy Information Administration data show.
鈥淚t鈥檚 been a long time since we鈥檝e seen a combination of low prices at the pump and a healthy economy,鈥 DeHaan observed. 鈥淭he last time that occurred was back in 2005.鈥
