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Average U.S. gas prices may fall below $3 a gallon, but declines could be limited

 UPI News logo: MainLogo UPI News 12/22/2022 Daniel J. Graeber

Dec. 22 (UPI) -- U.S. retail gasoline prices continue to move lower just in time for the busy end-of-year holiday travel season, but analysts are mixed over whether consumer-level prices will break the $3 per gallon threshold by the weekend.

Travel club AAA listed a national average retail price of $3.10 for a gallon of regular unleaded gasoline on Thursday, down more than 50 cents per gallon from this time last month.

A decline in commodity prices and improvements in gas mileage all helped with the steady drip lower for prices at the pump. Data from the Energy Department show consumer demand increased from 8.26 million barrels per day last week to 8.71 million bpd, but that level is still below year-ago levels.

Domestic storage levels for gasoline improved as well to combine for lower prices at the pump.

"As demand remains low and stocks rise, drivers will likely continue to see pump prices decrease through next year," AAA said in a statement Thursday.

Federal data support that forecast, a forecast that Patrick DeHaan, the senior petroleum analyst at GasBuddy, said pointed to a $3 per gallon average just in time for Christmas.

"The national average price of gas is forecast to be $2.98 on Christmas Day, likely to drop below the critical $3 per gallon mark on or before Christmas Eve for the first time in nearly 600 days," he said as recently as Tuesday.

Crude oil prices account for the bulk of what consumers see at the filling station and those prices have been on the rise during the latter part of December. The price for Brent crude oil, the global benchmark for the price of oil, is up around 3.5% on the week to trade near $82 per barrel.

It was early December last time prices were this high.

Tom Kloza, the global head of analysis and the co-founder of the Oil Price Information Service, said an increase in crude oil prices will inevitably take wholesale and ultimately consumer-level prices with them.

In a Tweet, he doubted $3 per gallon was in the cards.

Meanwhile, a winter storm system has triggered blizzard warnings across the Plains and Great Lakes states, with forecasts of negative 40 degree windchill and possibly more than a foot of snow in some areas. That's expected to create significant travel delays and curb gasoline demand over the next few days and possibly limit any increases in consumer-level prices.


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