Gas Prices Could Be as Low as $1

Good news to all drivers out there, gas prices will continue to decline. The price of gasoline could be as low as $1 a gallon in some areas due to falling oil prices and the capacity at refineries being strong, according to USA Today.

Such low gas prices haven’t been seen since 1999, and states like Alabama, Arkansas, Missouri, Oklahoma, and South Carolina already have low gas prices averaging around $1.75 per gallon. According to ABC News, the average price of gasoline is now $2.05 a gallon, dropping a penny over the past three weeks.

Trilby Lundberg, a gas industry analyst, said that gas prices are at their lowest since 2009 and they could continue to go down as the costs of crude oil drop. Patrick DeHaan, a senior petroleum analyst for the website GasBuddy, said that one would be hard-pressed to find gas for $3 a gallon, except in certain areas of the West Coast.

On Friday, the average price of regular gasoline in New Jersey was $1.83 per gallon, according to NJ.com. Some recorded even lower prices such as $1.65 per gallon in Jersey City.

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DeHaan wrote in an article titled “GasBuddy Forecasts Fourth Straight Yearly Decline at the Pump for 2016,” that drivers will be spending $325 billion on gasoline in the United States, which is $17 billion less compared to 2015. Drivers still saved $134 billion on gas in 2015, compared to 2014.

“Looking at the broad range of factors that impact crude oil, forecasting gasoline and market fundamentals are a delicate balance of art and science,” said DeHaan. “While past history is never a guaranteed indicator of future performance, it does offer clues that are instrumental to short-term and long-term forecasts.”

USA Today reported that gas prices are mostly affected by four factors: oil prices, the capacity and proximity of the refineries, levies and state taxes. The price of oil has continued to drop and is at $33 a barrel currently. There is also “a supply glut” guaranteeing an oversupply of crude oil thanks to Saudi Arabia’s decision to keep oil exports high, which has dissolved the OPEC cartel.

In a recent article, The New York Times posed the question, “Why has the price of oil been dropping so fast? Why now?” Clifford Krauss, who penned the article, said it is a simple case of supply and demand. He also noted that oil production in the United States has doubled over a six year period, reducing the need to import as much oil from abroad. Oil from Saudi Arabia, Nigeria, and Algeria that used to sell in the United States is now competing for the Asian markets and the producers have had to cut prices. However, because of a decline in exploration investments, some signs have suggested that production is falling in the United States and other countries that produce oil.

“I’m not troubled by the plummeting prices,” said Frank Gray, a writer for The Journal Gazette. “I don’t own stock in Chevron or Exxon Mobil, though if you look at their price-to-earnings ratios they’re doing pretty well and paying nice dividends.”

Although he wondered why gas prices weren’t closer to $1.30 a gallon, he suspects inflation may have something to do with it.

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The website Leader Call, claims that a number of factors could make gas prices much higher. Those being a hurricane in the Gulf of Mexico, an unexpected shutdown at a refinery or a serious production problem in a major oil-producing country.

“While there are always some unforeseeable surprises, we’re confident that when we reach the end of the 2016, the roller coaster ride will net savings over fuel purchases of last year,” said Gregg Laskoski, a senior petroleum analyst for GasBuddy.

What are your thoughts on lower gas prices? Could they reach an all-time low?

[Photo by Joe Raedle/Getty Images]