Drivers, get pumped. The national average price of gas is set to drop below $3 a gallon on Saturday, marking the first time since December 2010 that it's been below that symbolic threshold, according to AAA. The nearly four-year stretch — 1,409 days — of average prices above $3 a gallon about to be broken is the longest such streak ever, the auto club said.
With consumer spending still muddling along, economist suggest that falling gas prices could help boost consumer sentiment and spending ahead of the holiday season. AAA said that lower gas prices are saving consumers at least $250 million a day compared to earlier in the year, when the average price hit $3.68 a gallon. The average price of gas had climbed as high as $3.98 a gallon on May 5, 2011. “Many Americans are spending $10 to $20 less to fill up the cars on every trip to the gas station compared to what they paid during the summer driving season,” Bob Darbelnet, CEO of AAA, said iin a statement.
The AAA survey showed the average at $3.003 as of Friday, down from $3.04 at the start of the week. The auto club said more than 60 percent of U.S. gas stations were selling gas for less than $3 a gallon, up from 30 percent two weeks earlier. The U.S. Energy Information Administration (EIA) had said on Thursday that the average national gas price could fall below $3 a gallon in the coming days. The EIA's average price as of the beginning of the week was $3.06, already the lowest since the end of 2010.
Gas prices typically drop at this time of year, according to AAA, but they’ve fallen more dramatically than usual because of tumbling crude oil prices as a result of increased supplies and a weaker outlook for global demand, as growth in China and elsewhere slows.
“The cost of crude oil accounts for approximately two-thirds of the price consumers pay for gasoline, which means, barring any other factors, gas prices continue to fall as long as crude oil prices decline,” AAA said this week.
The lowest average price in the country as of Thursday was in South Carolina, where drivers could fill up their tanks with regular gas for an average of $2.756 a gallon, in part because of lower state taxes. Drivers in Tennessee, Mississippi and Virginia can fuel up for average prices less than $2.80 a gallon.
“Gasoline prices in different regions of the country vary, because of localized supply and demand conditions, differences in gasoline quality specifications, notably those in California, and state and local gasoline taxes,” EIA analyst Tom Hess wrote in a brief on the agency’s website. “Retail prices on the Gulf Coast are often the lowest in the country because the region is home to about half of U.S. refining capacity and produces much more gasoline than it consumes locally. The Gulf Coast also generally has low taxes on gasoline compared with other locations.”
This article was updated at 2:25 p.m. on October 31.
Top Reads from The Fiscal Times: