The days of $3 a gallon gas are behind us for the time being, with the national average less than one cent higher than the year’s low on Jan. 26.
According to a report by AAA, the national average should soon dip below the $2 per gallon mark for the first time since 2009. Currently, the national average sits at $2.03 per gallon. Hawaii ($2.79) continues to have the highest average gas price and is the only state with an average price above $2.75 per gallon. California ($2.69) has the second highest average price for gas. South Carolina ($1.81) and Missouri ($1.81) are tied for the lowest gas in the country, followed by Oklahoma ($1.83).
It’s no surprise gas prices are moving lower. Winter demand for gas usually dips and with it pump prices decline too.
The U.S. Energy Information Administration is reporting that refinery production is outpacing both 2014 and current demand. U.S. crude oil stocks are nearing an all-time high, and questions about continued production and storage capacity are beginning. Strong production and growing gas inventories are likely to keep prices low leading into 2016, according to AAA.
Last week OPEC decided to sustain current production levels, which has contributed to lower oil prices, AAA pointed out. “The cartel is not scheduled to reconvene until June 2016, and in the interim the imbalance between supply and demand will likely persist.”
According to AAA, the Federal Reserve is expected to raise interest rates following a strong U.S. jobs report. A higher interest rate typically leads to a stronger U.S. dollar, which makes oil relatively more expensive for those with foreign currencies. This combination could continue to grow oversupply and keep pump prices heading downward. The domestic oil market also has signs of oversupply as crude oil and gas inventories near record levels.