U.S. motorists’ hopes that the price of gasoline will fall below $3 a gallon in time for the Christmas holidays could be realized in the next few days if benchmark oil prices keep falling on commodity markets.
Patrick De Haan, oil market analyst and Twitter’s @GasBuddyGuy, said Friday the national average pump price had fallen to $3.17 a gallon and was still moving lower.
Oil prices and wholesale gasoline prices were higher on Friday, however. The United States Gasoline Fund UGA, as an exchange-traded fund that tracks gas prices, was up 2% at $59.30.
The last time the average pump price was below $3 was in May 2021 — but back then it was on its way higher, following several years at less than $3. At its lowest in April 2020, during a massive drop in demand during the Covid pandemic, motorists were paying an average of just $1.84.
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Oil Market Shocks
You only have to look at the underlying commodity market to see why it was so cheap back then: in mid-April 2020, Nymex West Texas Intermediate, the U.S. benchmark oil futures price, was already trading at historic lows between $15-$20 a barrel — then on April 20, it suddenly dived into negative territory — essentially meaning oil producers should be paying to have their oil taken off them.
But that’s the nature of oil markets. They are prone to shocks — and we’ve seen a few. Particularly in the 1970s and 80s during strife in the Middle East that sent prices soaring. Unfortunately — for the motorist — upside shocks are more common than ones that drive prices lower.
But here’s a sign that everyone in the U.S. should welcome. Wholesale gasoline prices have just fallen below $2 a gallon.
De Haan Tweets: “NYMEX RBOB (the benchmark for the future of #gasprices) has just fallen below $2/gal for the first time since 2021. GOOD NEWS: this signals a strong possibility that the national average will fall to $2.99 by Christmas if it can remain at/below that level.”
Consumers Are Happy, But Europeans Aren’t
Falling gas prices keep the consumer happy, too. The price of petroleum at the pump is as good a measure of inflation as most consumers need. Indeed, Friday’s Michigan Consumer Confidence survey for December showed sentiment rising to its highest level since August.
“Everything is just gas prices,” said Michael Antonelli, market strategist at Baird.
But spare a thought for the Europeans — of which this reporter is one. Here in the UK we’re paying an average of around £5.64 a gallon — that’s $7.07.
And look at this over in France, Tweeted by our @GasBuddyGuy:
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