The price of a gallon of gasoline may soon start with a “2” across much the country.
Gas prices typically decline in autumn, and this year they are being pulled even lower by falling global oil prices. By the end of the year, as many as 30 states could have an average gasoline price of less than $3 a gallon.
The average in Springfield, Missouri, is already below $3, according to Tom Kloza, chief oil analyst at the Oil Price Information Service and GasBuddy.com.
“And there will be more, many more,” Kloza said. Cities in high-price states such as California and New York will not be among them, though, which will probably keep the national average above $3.
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At the current national average of $3.35 a gallon, gas is a dime cheaper than it was a year ago at this time. The gap is 20 cents or more in seven states, including California, Kansas, South Dakota and Connecticut, according to AAA.
Lower fuel prices help the economy in several ways. They make goods cheaper to ship and make travel more affordable. Drivers are left with a few extra dollars in their pockets. And consumers grow confident enough to make other purchases, perhaps even big-ticket items. Consumer spending accounts for 70 percent of the U.S. economy.
Fall is when refiners are allowed to switch to a cheaper blend of gasoline for the cooler months, and driving demand declines after summer vacations have ended.
Refinery problems or hurricanes can disrupt the typical autumn price decline by reducing gasoline production. For example, a reported outage at a refinery in eastern Canada that supplies gasoline to the U.S. Northeast is likely to push the price at the pump slightly higher in some markets over the next few days.
But by late October prices are usually well on their way down.
The drop in global crude oil prices was unexpected. Despite increasing violence and turmoil in the Middle East, the world’s most important oil-producing region, the global price of oil has fallen to $97 a barrel, close to its lowest level in more than two years.
That’s partly because new technology has allowed U.S. drillers to consistently increase production from fields in North Dakota and Texas, adding to global supplies. At the same time, world demand is not growing as much as anticipated because of slower economic growth in China and Europe.