Gas prices could soon dip below $4 a gallon. So why are fuel costs falling?
Motorists could soon see U.S. gasoline prices fall below $4 a gallon for the first time since July, according to energy experts.
Patrick De Haan, a petroleum expert at price-tracking firm GasBuddy, told CBS News that he expects the national average for gas, which the price-tracking firm put at $4.06 a gallon on Thursday, to dip below the $4 threshold by next week. He also predicted diesel could fall below $6 a gallon by Thanksgiving, he said.
Gas and diesel prices have both dropped in recent weeks. The decline was largely due to market expectations that the U.S. midterm elections would underscore public dissatisfaction with the war in Iran and increase pressure on the Trump administration to strike a deal ending the conflict, De Haan said.
“Oil prices have been falling in the run-up to the election,” he said. “My read is because there was optimism that after the midterms these problems would be addressed.”
Other factors pushing down gas prices
Other factors are also putting downward pressure on fuel costs. Oil tanker traffic through the Strait of Hormuz has picked up, easing constraints on global oil supply, De Haan said.
Brent crude, the international benchmark, fell below $100 on Thursday for the first time since September, trading at $97.44 by midday. West Texas Intermediate, the U.S. benchmark, was trading at $90.42 a barrel.
The recent drop in gas prices is also partly due to seasonal shifts. Prices tend to dip in the fall when Americans pull back on road trips and summer travel, De Haan noted. Filling stations are already switching to winter-blend gas, which is less costly to produce than summer-blend fuel.
Tom Kloza, chief energy adviser for Gulf Oil, predicts that the average U.S. gas price will sink below $4 within the next 10 days. The profit gas stations earn on each gallon of gas sold — currently around 75 cents per gallon — is also larger than usual.
“Historically, that is too outsized,” he said in an email. “A more normal markup would be 40 cents a gallon, and that means that even if futures prices and physical markets hang around present levels, we should see lower pump prices for the foreseeable future.”
The Trump administration has used various tools to ease gas prices. That includes expanding access to tax-free red-dyed diesel, opening the door to Russian diesel imports, and waiving what’s known as the Jones Act, a federal statute that requires goods shipped between U.S. ports to be moved on ships that are U.S.-built, U.S.-flagged and U.S.-crewed.
