Gas prices are expected to plunge sharply in the final days leading up to the midterm elections, potentially nearing $2 a gallon at some stations in low-tax states.
The sudden respite at the pump comes from sharply lower oil prices and declining wholesale gasoline prices.
Oil Price Information Service analyst Tom Kloza said it could amount to a “colossal collapse” in prices for consumers: from a $2.78 national average on Friday to as low as $2.50 by Tuesday.
“There’s the possibility you could see some prices flirt with $2 a gallon in the next 10 days or so in some of the low-tax areas,” Kloza said. “For now it’s going to be a great break.”
The break comes after gas approached four-year highs in October, topping a national average of $2.90 a gallon at one point.
Prices have already fallen by 6 cents per gallon over the last week, according to AAA. But they remain 27 cents higher than a year ago.
About 500 stations throughout the country were charging less than $2.25 as of Thursday. Kloza predicted that figure could top 1,000 stations by Tuesday, when voters head to polls throughout the country.
Of the 48 contiguous states, Delaware’s gas was cheapest as of Friday at $2.47 a gallon, according to AAA. California’s was most expensive at $3.77.
U.S. oil prices have fallen about $13 per barrel from their October high, trading at around $63 on Friday morning.
One key reason: Rising oil production throughout the world is causing stockpiles to build up.
The Organization of the Petroleum Exporting Countries’ output has reached a two-year high, with leading OPEC member Saudi Arabia’s output “near its all-time high,” Jefferies analyst Jason Gammel said in a research note. American oil output has also spiked.
“This surge has driven the market into oversupply,” pushing prices lower, Gammel said.
To be sure, the respite in gasoline prices may be temporary. President Donald Trump has ordered the U.S. to reimpose certain sanctions on Iran in the coming days after they were lifted as part of a nuclear deal arranged by President Barack Obama.
If Iranian oil exports fall, oil prices could jump, causing American gas prices to increase as well, said Patrick DeHaan, senior petroleum analyst at fuel finding app GasBuddy.
“I think there will be a reversal of fortunes,” DeHaan said.
That said, oil prices declined Thursday in part because the U.S. announced waivers on certain Iranian oil exports, suggesting that the falloff in Iranian petroleum may not occur right away.
(Photo: tentan / Getty Images)
