Lowest gasoline prices at the pump are in Missouri, Oklahoma and South Carolina.
Christmas came early for U.S. drivers on Monday, as the national average gasoline price fell below $2 a gallon for the first time since March 2009.
AAA put the average U.S. gas price at $1.998 per gallon on Monday, while fuel-price tracking service GasBuddy.com calculated the national average at $1.995 a gallon. That’s the lowest price by either measure since March 25, 2009.
Unsurprisingly, drivers can credit a global glut of crude oil for the steady pressure on gas prices. Brent crude the global oil benchmark, plumbed levels last seen in 2004 on Monday, while the January contract for the U.S. benchmark West Texas Intermediate crude, was down 49 cents, or 1.4%, ahead of expiration at $34.24 a barrel on Nymex. The most-active February contract is down 1.3% at $35.58.
“In areas where there are no refinery bottlenecks, we’ve been able to see the falling price of crude oil translated directly into cheaper gas prices,” said Patrick DeHaan, senior petroleum analyst at GasBuddy.com, in a phone interview.
Nymex reformulated gasoline futures for January delivery slumped 6.33 cents, or 5%, to $1.2114 a gallon.
So how low are gas prices? In much of the country, the price is already well under $2 a gallon, AAA notes, with 1% of stations selling gas at $1.59 a gallon. On a state-by-state basis, Missouri has the lowest average price at $1.77, followed by Oklahoma and South Carolina at $1.78, and Tennessee and Kansas at $1.79.
Not everyone is celebrating at the pump, however. Lingering problems surrounding a Torrance, Calif., refinery, which suffered an explosion in February, and problems at other regional facilities have seen prices creeping higher in California and other western states, DeHaan noted. Exxon Mobil agreed to sell the crippled Torrance refinery to independent refiner PBF Energy in September.
Gasoline prices may be due for a near-term bounce but are likely to remain under pressure through winter, thanks to weak seasonal demand, said DeHaan. He sees prices potentially testing $1.85 by mid-February, he said.
AAA estimates that cheaper gas prices have translated into more than $115 billion in savings on gasoline in 2015, equal to around $550 per licensed driver.
Will the continued drop in gas prices translate into a more robust holiday retail sales? While the sharp drop in energy prices since mid-2014 has been a boon for consumers, it so far hasn’t translated into the boost to consumer spending many economists had initially penciled in as consumers were, at least at first, reluctant to spend their windfall.
This thought piece is courtesy of William Watts and MarketWatch.com / Dec 21, 2015