Gas Prices Start to Plunge

By Douglas A. McIntyre Published May 6, 9:15AM EDT

Quick Read

Oil prices have dropped to a four-year low, which could take the average price of a gallon of regular gasoline nationwide to below $3.
The downward pressure on gas prices is substantial and growing.

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Gas Prices Start to Plunge — © bigtunaonline / iStock via Getty Images

Oil prices have dropped to a four-year low of $57.50 a barrel. The reason was the announcement by OPEC+ that it would raise output by 411,000 barrels per day. It also announced a cut the month before.

The trigger for the sharp decline is how much of the world’s crude OPEC+ provides. In discussing OPEC’s output hikes, Peter McNally, a Third Bridge analyst said, “For the producers outside of the OPEC+ group, which is now nearly 60% of global oil supply, the market share gains may have reached a peak if these new barrels are fed into the market and prices move lower.”

Additionally, U.S. production has recently reached an all-time high. Russia continues to put crude onto the market, although much of it is sold to China and India.

The primary contributor to gasoline prices is crude. Falling crude prices could take the average price of a gallon of regular nationwide to well below $3. Even during the COVID-19 pandemic, the average price per gallon of regular gasoline nationwide remained well above $3.00. At the other extreme, as Russia invaded Ukraine, the price of crude jumped to over $100, and gas prices surged to nearly $5 a gallon.

There are other reasons oil prices could drop, including worry about a recession brought on by tariffs. This has already started to hurt the Chinese economy. China is the largest importer in the world. Also, U.S. consumer confidence has collapsed, meaning GDP growth could contract as it did in the first quarter.

The average price for a gallon of regular nationwide is $3.15. That is down from $3.65 a year ago. In some states, gas prices are already well below $3. In Louisiana, Mississippi, and Oklahoma, it is at $2.70 or lower. Granted, these states have low gas taxes.

The United States may be headed toward a recession, or may already be in one. In the first quarter, gross domestic product dropped 0.3%. Most indicators for the current quarter indicate the U.S. economy continues to be weak.

The downward pressure on gas prices is substantial, and if anything is growing.

Are Electric Cars Really Better for the Environment?

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.