Return of the $3 Gallon? U.S Gas Prices Are Falling Fast

The nation­al aver­age price of reg­u­lar unlead­ed, now at $3.38 a gal­lon, is down 8 per­cent from the end of June. Tom Kloza, chief oil ana­lyst at GasBuddy.com, thinks this year will bring the cheap­est autumn gaso­line prices since 2010.

Last year dri­vers spent $40 bil­lion at the pump in Sep­tem­ber, and Kloza thinks that bill will be at least $2 bil­lion low­er in 2014. The sav­ings at the pump should help stim­u­late con­sumer spend­ing in oth­er parts of the econ­o­my.

Gas prices are cheap­est in the South and high­est in the North­west. Shale oil being pro­duced in North Dako­ta and Texas has had an eas­i­er time trav­el­ing south and east, while few­er trains have head­ed west, across the Rock­ies and into Wash­ing­ton and Ore­gon (though that is start­ing to change). Still, it’s a big dif­fer­ence.

The aver­age gaso­line price out­side Lit­tle Rock, Ark., is $3.05; near Seat­tle, it’s $3.87.

• This all starts with the price of oil, which makes up  of the cost of a gal­lon of reg­u­lar gaso­line.

• Inter­na­tion­al crude prices have fall­en 16 per­cent since the end of June, and U.S. prices have dropped more than 11 per­cent.

• Dif­fer­ent parts of the coun­try use dif­fer­ent sources of oil to make gaso­line.

• Most import­ed blends of light, sweet crude no longer come into the U.S. Gulf Coast, by far the biggest refin­ery base in the U.S.

• Refin­ers are also get­ting ready to switch to the win­ter blend of gaso­line, which is cheap­er to pro­duce but fetch­es low­er prices.

If that trend con­tin­ues in 2014, it could put prices in some parts of the coun­try below $3.

Unex­pect­ed events could always shake the oil marked. With the U.S. and its allies plan­ning to step up attacks on ISIS this fall, oil prices could cer­tain­ly spike by the end of the year.

As long as U.S. pro­duc­tion keeps ris­ing, how­ev­er, it should help keep prices in check.

 

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