Today, the price for a gallon of gasoline in the U.S. is the cheapest we’ve seen since February of 2011, averaging $3.19 per gallon.
And that’s exactly where it’s supposed to be. We’ve been seeing prices fall steadily since the end of summer, and all the predictions call for a continuation of this drop. But how far, and for how long? That’s what we’re here to find out.
The good news: it looks like Christmas is coming a little early this year. Whether you’re on the naughty or nice list, we’re all going to get a little relief at the pump this holiday season.
Last week, prices were dropping a penny a day, bringing us to a new low for the year on Monday – about 6 cents less than last week and 25 cents less than the average at this time last year, according to Time. The previous low for this year (before the last two weeks) was in early January, when it measured $3.29.
In six states, the average is already below $3 – Missouri, Oklahoma, Arkansas, Texas, Kansas, and Louisiana – while averages in another six states come in just over that mark and could be below $3 very soon.
The lowest is Arkansas, at $2.93 per gallon. California has the highest price at $3.61.
Prices will likely continue to drop into the New Year, bringing a little relief to what is supposed to be a brutal winter, especially for those in the northeast.
And if we drive around long enough, we’ll find that 20 percent of the gas stations in the nation are already serving gas at below the $3 mark, so it’s something a lot of us might as well get used to seeing.
AAA is forecasting a national average of $3.10 by year’s end, according to Time. The last time the national average was below $3 was December 22, 2010.
We probably won’t see the average price for a gallon of gasoline drop below $3 in time for Christmas, but the savings we’re all going to get could be a jolly good boost for the holiday shopping season – something needed at a time when many consumers are still uneasy about the economy and after the nation just suffered its first government shutdown since the Clinton administration. Retailers had been expecting lackluster spending this year, but with a little extra coin in our pockets, spending could easily get a boost.
But not everyone would agree. There’s a Grinch around every corner who thinks it will make no difference at all. People are fed up with low wages, the government, and an unstable economy, they’d say. They won’t be driving more. They won’t be taking more vacations, and they certainly won’t be buying more toys.
Well, I say they can all go Scrooge off this holiday.
I’m saying that because there’s so much to be optimistic about this year. I won’t touch our health care crisis (yikes!), but overall, if we look at the market – it’s flourishing! Gas prices are going down, and compared to just a few short years ago, we’ve dug ourselves from the economic trenches and are getting stronger every day. Maybe it’s the Thanksgiving season talking, or maybe the Christmas bug has hit me early this year, but I think there’s a lot to be thankful for.
Right now in the U.S. we’re lucky enough to easy access to cheap crude. With an increased supply and a bottleneck that is easing up, we reap the rewards at the pump. We’re importing much less oil from other parts of the world – like the Middle East and others who use oil as a political weapon – and we’re feeling the effects.
Because it’s winter, refineries will be switching to a winter blend of gasoline, one that is cheaper than the summer blend because of fewer environmental restrictions. And because the industry is addressing the bottleneck issue, production is revving up and transportation is improving – all forcing crude prices down and giving us relief at the pump.
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There are a ton of factors that contribute to gas prices. We can talk about the quiet hurricane season or the lack of disruptions in U.S. refineries that kept inventories high; the threat of U.S. involvement in Syria; we could even touch on the increasing fuel efficiency in our vehicles today, driving down demand.
These factors all, in some way, are helping push prices down at the pump.
The biggest one of all, though, is gas taxes. Depending on what region of the country you live in, you could be getting hit hard by something you have no control over – the regional gas tax.
The federal tax on gas is 18.4 cents per gallon, according to 24/7 Wall St, but state and local taxes can range anywhere from 12.4 cents per gallon in Alaska to 53.2 cents a gallon in California, with the average being 31.1 cents. If we look at the states with the cheapest gas, none of those are above 25 cents per gallon.
I contend that we should embrace this holiday season with open arms; there shall be no bah humbugs from me. It’s high time we celebrate the gifts that we’ve been given, and it starts at the pump.
While high-price states like California and New York may keep the national average above $3, there’s also a good chance that prices will keep going down, falling below $3 for the first time since 2010.
That’s what I’m betting on. And while we see the price of natural gas falling year after year, I think it’s a good idea to take a little of those savings you’ll get and check out those companies that will profit from the low cost of energy.
Dow Chemical (NYSE: DOW), for example, uses natural gas as a feedstock and as energy; FreightCar America (NASDAQ: RAIL) is selling more tanker cars than ever before; and Cummins, Inc. (NYSE: CMI) is building a new heavy duty, fuel-efficient engine.
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