U.S. motorists are paying an average price of $2.13 per gallon at the pump today, which is more than 40% lower than the 2014 peak of $3.70 reached on April 28, according to a new report from AAA.
The national average continues to fall to lows not seen since May 2009. In fact, the national average has now dropped a record 109 consecutive days for a total decline of $1.22 per gallon during this span, noted AAA. Today’s price is seven cents less than one week ago, 45 cents less than one month ago and $1.18 less than one year ago. Barring any major increases in the global price of crude oil, AAA expects the national average price for regular unleaded gasoline to remain below $3 per gallon in 2015.
And motorists in 11 states have even seen their average gas price fall to below $2 a gallon over the past week, bringing the total number of states below this threshold to 18. AAA predicts that this number could rise to 25 by the end of next week given current trends.
The huge drop in retail gas prices is being driven by a similar plummet in global crude oil prices since the end of the summer. This decline in the price of oil has been a product of weak demand combined with abundant supply, AAA explained. But will the low prices remain?
AAA pointed out that in countries like the U.S., where the cost of oil extraction is more expensive, producers may be forced to reassess their plans to factor in profit margins that are sharply lower or even reversed as markets continue to register multi-year lows. Meanwhile, countries that rely heavily on oil revenues to fund government services may find themselves in situations where reductions to social programs are necessary, which could lead to civil unrest. Either of these dynamics has the potential to put upward pressure on prices.
The global price of crude has lost more than half its value since mid-2014. AAA reported that OPEC has reiterated that it will not intervene in the market to force prices higher and plans to sustain its current production levels, with the earliest possibility for supply reductions reportedly pushed to their next meeting scheduled for June.