In five years, for the first time, a $2 gasoline might be coming back to some areas in the United States. This is just in time for the upcoming holidays. The last time average gas price was below $2 was on March 2009.
Retail gasoline stations across the U.S. South and Midwest are about 20 cents shy of the target of $2 per gallon. Gas futures dropped more than 13 cents on November 27 after OPEC had failed to cut oil production. That decline could pull down pump prices by as much as 20 cents a gallon.
According to a senior petroleum analyst at GasBuddy Organization Inc, "We could see the cheapest 1 percent of stations get within a few pennies of $1.99 over the next two weeks. We'll see at least one station in the nation at $2 by Christmas. And that's not really a prediction at all. That's more like a certainty."
The Organization of Petroleum Exporting Countries who is responsible for about 40 percent of the world's oil supply has decided to maintain its collective crude output target at 30 million barrels a day. Given that they have decided not to cut production, $2 a gallon might happen.
Gasoline futures fell below $2 a gallon this month for the first time since September 2010. The average pump price was $2.792 on November 27, down 90.4 cents from this year's peak of $3.696 on April 26. This is also the lowest since October 2010 according to data compiled by AAA show.
Motor fuel fell by almost $1 per gallon in the U.S. from this year's peak. This allows the Americans to have at least $500 annually in extra disposable income according to estimates.
The first part of the U.S. to reach the $2 mark might be somewhere in the Southeast where fuel taxes are low and stations have cheaper supplies flowing in from oil refineries along the Gulf Coast."
