American Gasoline Prices Could Plunge Below $3 A Gallon

The U.S. national average price per gallon of gasoline could decline to under $3 for the first time since 2021, amid sluggish demand, GasBuddy’s Patrick De Haan said on Monday. 

Gasoline prices have fallen for the second straight week, down 3.8 cents from a week ago to $3.03 per gallon as of Sunday. Compared to a month ago, the average price per gallon is down 12.2 cents, while prices are down 22 cents compared to a year ago, according to GasBuddy data. 

“With a record rise in gasoline inventories last week as demand was anemic during the holidays, motorists have provided the catalyst for falling prices,” De Haan said, adding that “if demand remains weak, gasoline prices could fall further.”

De Haan also noted that prices should begin to fall in California, which is typically the outlier, as well as in Nevada and Arizona, due to an easing of refinery issues. 

Those decline paths provide “momentum for a possible run at a $2.99 national average”, De Haan said, cautioning that this could create additional volatility in the run-up to Spring, where a sharp rise in prices could see up to an 85-cent increase per gallon around mid-February. 

In terms of fuel demand, U.S. retail gasoline demand was up 2.3% for the week ending January 7. 

Median U.S. diesel prices shed 10 cents from last week, GasBuddy said. 

GasBuddy’s latest data comes amid a sharp drop in crude oil prices on Monday. At 12:17 p.m. ET on Monday, West Texas Intermediate (WTI) was trading down 4.71%, threatening to dive below the $70 threshold. Brent crude was trading down 3.97% at $75.63. 

GasBuddy described the oil price drop as the market “digesting slowing demand and economic concerns, alternating to optimism and concerns over Houthi attacks in the Red Sea”. 

By Charles Kennedy for Oilprice.com

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