NEW YORK — Here comes $2 gas.
Gas prices have dropped about 5% in the last month to $2.60 a gallon according to AAA. And they’re expected to fall even more this fall, as they begin to more closely track the price of oil, which plunged 18% in the previous month.
Gasoline has been slow to follow oil prices lower due to outages at several major refineries. Problems at the BP refinery in Whiting, Ind., caused a price spike in much of the Great Lakes region in recent weeks. And a fire at a Delaware refinery on Friday could bump up East Coast gas prices.
Also keeping prices higher is the fact that gas stations are required to sell a more expensive summer blend of gas until Sept. 15, when environmental regulations allow the winter blend to roll out.
But all of this is about to change, says Tom Kloza, chief oil analyst for the Oil Price Information Service, which tracks pump prices for AAA. He expects gas to be below $2 by Thanksgiving, if not well before then.
“Even if oil rebounds back to $45 a barrel, most of the country should get to $2 a gallon gas pretty quickly this fall,” he said.
There are about 750 gas stations, mostly in seven southern states, that are already selling gas for less than $2 a gallon. But there are 130,000 stations nationwide. Kloza predicts more than 60% of U.S. stations will have gas below $2 later this year.
This should give a lift to the U.S. economy, even if low oil prices is costing jobs in the U.S. oil patch, since the typical motorist will save more than $50 a month at the pump.
Oil prices are being pushed down by record U.S. production as well as the nuclear deal with Iran, which could end sanctions and bring even more oil onto the global market. OPEC nations such as Saudi Arabia typically respond to falling prices by cutting their own output, but that hasn’t happened this time.
On the flip side, demand is falling thanks to slowing economic growth in Asia and Europe and more fuel efficient cars, which is adding to the oil glut on the global market.