Gas Prices Are Headed Toward $2

By Douglas A. McIntyre Published Nov 12, 9:15AM EST

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The average price of a gallon of gasoline in the U.S. has slipped below $3 as oil supplies continue to increase.
Gas prices could fall to $2, and least in some states, if not nationwide.

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Gas Prices Are Headed Toward $2 — © marinzolich / Getty Images

The average price of a gallon of gasoline nationwide recently slipped below $3. Due to the war in Ukraine and concerns about the oil supply, it topped $5 in mid-2022. It was as low as $2.15 in 2020 at the start of the COVID-19 pandemic. And it was about that low in 2016, due primarily to an oversupply of oil, resulting from the shale boom.

The supply issue has returned. The International Energy Agency says oil supplies could continue to increase until 2030. Demand could stay high until 2050. One reason for the rise is the lack of worldwide clean energy policies and any effort to enforce those if they emerge. Another reason is that OPEC+ has increased production. The United States is pumping oil at a record pace.

Gas prices have already dropped to near $2 in some parts of the nation. In one area of Oklahoma, they reached $2.19 this month. The state’s average is $2.49, and the $2.19 price is unlikely to hold for long. The circumstances of the long term are different.

Three factors have the most significant influence on gas prices. One is the price of oil. Benchmark West Texas Intermediate crude was $80 a barrel at the start of this year and recently dropped below $60. Bank of America recently forecast that the price of Brent crude could fall as low as $50, given OPEC+’s current production.

The next significant influence on oil prices is the location of refineries and the transportation distance from them. Refineries that produce large quantities of gasoline have a significant impact. Because of the huge refineries on the Gulf, south of Houston, Texas and neighboring states are more likely to have cheap gas than almost anywhere else in America.

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Finally, there are state taxes and levies, which are extremely low in some states and are very unlikely to rise. The national average is approximately $0.50 per gallon. However, in Texas and Louisiana, they are $0.20.

Will gas prices in the U.S. fall to $2? In some states, probably. On a national basis, if oil prices continue to fall, that may be the price nationwide.

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.