Dec 14, 2023 - Economy

$3 per gallon gasoline is in sight amid record U.S. oil production

Illustration of a gas can with a dollar sign etched on the side.

Illustration: Aïda Amer/Axios

Gas prices look poised to fall below $3 per gallon for the first time since May 2021.

Why it matters: Prices at the pump can dictate drivers' budgets, and have been shown to impact consumer sentiment.

Zoom in: The national average price of gas was $3.07 as of this afternoon, marking its lowest point in 2023, according to GasBuddy.

  • "We are now within just a couple cents of falling to the lowest levels since 2021," Patrick De Haan, head of petroleum analysis for GasBuddy, tells Axios.

The big picture: Myriad factors have led to lower prices in recent weeks, including concerns about China's economy, record U.S. oil production and traditional seasonal patterns, De Haan says.

Between the lines: The decline in gas prices is a significant factor in the broader decline in inflation.

  • Consumer prices increased modestly from October to November, but the falling price of gasoline helped keep overall inflation in check, according to the Consumer Price Index released Tuesday.
  • Gas prices were down 8.9% year over year and down 6% compared with October.

By the numbers: The average price of a gallon of regular unleaded gas is now below $3 in 29 states, according to GasBuddy.

  • When factoring in inflation, the price of gas is about where it was at this point in 2017, De Haan notes.

The impact: More affordable gas may be putting pressure on sales of electric vehicles.

  • Ford said this week that it's cutting 2024 production of its F-150 Lightning pickup in half.

What we're watching: De Haan says he believes prices could drop below the symbolic $3 threshold by Christmas, but don't expect much more than that.

  • "We traditionally bottom out between Thanksgiving and Christmas," he says.

Go deeper: Record U.S. oil production is pushing prices down

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