$3 per gallon gasoline is in sight amid record U.S. oil production
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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.
- It's a reversal from the high heights of 2022, when the Russian invasion of Ukraine led to a boom in oil prices.
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
