New York (CNN Business) – Gasoline prices in the US continue to fall and could continue to fall, raising the possibility that gasoline will be under $3 a gallon in most parts of the country before the end of the year.
The national average for a gallon of regular gasoline was $3.96 on Monday, just a fraction of a cent lower than it was on Sunday. However, this decline continued in a series of 62 consecutive days of lower gasoline prices.
The national average price is down $1.06, or 21%, since hitting a record $5.02 per gallon on June 14.
The average is somewhat overpriced by some of the higher-priced states, such as California, where the average is $5.37 per gallon. The national average price, the price at which half of the nation’s gas stations sell for more and the other half for less, has fallen to $3.80 a gallon.
Almost all countries enjoy relief from high prices. Even in states with high gas prices, like California, the average price has fallen by more than $1 per gallon since it peaked in June.
In 28 states, the average regular system price is now $3.99 or less. Nearly two-thirds of the 130,000 gas stations across the country sell for less than $4 a gallon. And many sell it for much less. About 25% of stations across the country sell gasoline for less than $3.50 a gallon.
As students start going back to school and the summer driving season draws to a close, the price of gasoline is likely to fall even more, said Tom Cluza, global head of energy analysis at OPIS, which tracks American Automobile Association (AAA) prices. It’s entirely possible, he said, that by September or October, the national average for regular products will be back below $3.53 a gallon, which it was when Russia invaded Ukraine in late February.
He said Monday’s wholesale gasoline futures for November and December suggest retail prices will fall below $3 in many states by the end of the year. But he said there was still a risk that an unexpected rise in gas prices could derail this good news for drivers.
“We still don’t know what Putin will do or if a hurricane will hit the Gulf Coast,” he said of factors that could cause gasoline prices to rise again.
The main driver of the drop in gasoline prices is lower oil prices, which reached their lowest level in six months in trading on Monday, as futures contracts fell another 4% due to mounting concerns about a global recession. Since June 8, oil futures are down between 24% and 28%, depending on the benchmark crude used.
Recessions can reduce demand for oil and gasoline dramatically, as people lose their jobs and do not need to travel to work, or spend less and travel less. In 2008, the average price of gasoline fell 60% between a record price of $4.11 a gallon in July and the end of that year, when the crash in financial markets caused a major recession and massive job losses.
Monday’s drop was partly due to the Chinese central bank feeling compelled to cut interest rates due to signs of a slowing economy there.
“The market has taken this as a bearish signal on the oil demand outlook,” said Richard Joswick, head of global oil supply research at S&P Global Commodity Insights.
There were also indications of the possibility of a new US-Iran nuclear weapons deal, which could pave the way for the return of Iranian oil exports to the market. Kloza said this was a major factor in the oil price slide on Monday. Other experts also see news from Iran as a factor driving oil prices down, even if Iranian oil does not start flowing freely until 2023.
“If an agreement is reached with Iran, the ramifications for the oil market and Russia could be far-reaching,” Andy Lipow, president of Lipow Oil Associates, wrote in a note Monday.