High supply and low demand are the main factors that have sent gas prices to a record low of an average of $3 a gallon nationwide, Yahoo Finance reports. Crude oil prices have been free falling since summer, and gasoline prices are slowly catching up, sending gas prices down as well. According to the publication, the nationwide average gas price is currently 9% below the level they were on at this time of last year, while crude oil prices have fallen 16%.
Crude oil prices have been falling since this summer, Yahoo Finance writes. West Texas crude oil has dropped below $100 a barrel in July, and has continued falling for the last few months, currently being at a level around $80. As two thirds of the gas price is determined by the price of the crude oil, and its plummeting price usually means cheaper fuel, a beneficial turn for the end user. Jeff Kilburg, founder and CEO of KKM Financial, has declared that refineries are the ones that will benefit the most of the discrepancy between the price of the crude oil and the fuel itself. Kilburg expects the price of the oil to go further down, considering that there is a constant selling pressure since the price first got under $86.14 a barrel. According to Yahoo Finance, the specialist expects gas prices to fall further, hitting the rock bottom at around $2 a gallon.
Another factor that has determined the gas price to go down is the refiners’ switch to a cheaper winter blend of gasoline. Paired with the low demand and the high supply, this is also responsible for the plummeting of the gas prices at the pumps. Cheaper gas means savings as well – drivers can save up to $20 at a fill-up, and this can lead to them spending the remaining cash on other things, like groceries or even sweets and soda at the gas stations.