$2 gas could be near as drivers could see prices falling quickly between Labor Day and December. The low prices could be back after the Iran nuclear deal is reached with the United States, according to CNN Money.
Gas prices have dropped 2 cents over that past two weeks to a national average of $2,85 per gallon. If Iranian oil begins flowing to the United States again, drivers will see a downward spiral in prices.
Iran has been unable to sell oil to the U.S. since 1995, the report states, though details on lifting the trade sanctions still need to be worked out. Even if there’s a delay in lifting the U.S. sanctions, the sale of oil to Europe would push down prices globally, CNN reported.
$2 gas prices are seen across the nation, but only three states report statewide averages higher than $3, travel organization AAA reported Monday: Alaska, Hawaii and California, regularly the highest-price states. AAA uses a different survey than the government’s, but nearly always comes up with similar numbers. The government does not publish a state-by-state survey.
The U.S. Energy Information Administration said its average is 21.6 cents a gallon lower than a year ago. It is the sixth-consecutive week that the nationwide average has declined in the EIA’s survey, for a total drop of $1.179 per gallon in that time.
The collapse in prices has been faster and deeper than forecast because of the Iran deal.
“It is stunning,” says Tom Kloza, petroleum-price analyst at the Oil Price Information Service, a consultant. “I remember saying $2.75 by Halloween. Now, I think $2.50 by Election Day.”
Gasoline dealers probably will have to dig out the “1”s for their price signs, he says, “but I wouldn’t get rid of the ‘4’s, either,” because the average could return to record levels before the next administration’s first term is over.
The impact on the collapsing auto industry could be sudden. “Month after month after month, the lower the price of fuel, the higher the interest in larger vehicles and engines,” says Jim Hossack at consultant Autopacific.
Autopacific’s latest survey was in September, when prices had fallen only a few cents, Hossack says, and already fewer people said they’d trade for a small car than in July, and more said they’d trade for a pickup.
Bigger vehicles tend to be more profitable, but automakers have slashed production of those models and might not be able to exploit a full-scale buyer reversion to big vehicles.
Low fuel prices are a bright spot for motorists but result from global economic problems. The price of oil is showing that investors fear a long slump.
A barrel of West Texas Intermediate, also called light, sweet crude oil, for delivery in December was $63.22 at the close of Nymex trading Monday, after trading as low as $61.30. Friday’s close was $64.15, down $3.69.
Oil has traded for as much as $147.27, a record set July 11.
Economic worries are overpowering any effect from the production cuts announced last week by the Organization of Petroleum Exporting Countries.
“Slowdown in economic growth is contributing to the recent decline in oil demand and the sharp decline in prices since July,” EIA said earlier this month.
$2 gas prices is good for the economy and could be a Christmas present for the middle class. But that’s if an Iranian deal is met.