How does gas for $3 a gallon or less sound?
No guarantees, but there’s a strong possibility gasoline prices will drop to that level or even lower in the Kansas City area and elsewhere.
On Tuesday, the federal Energy Information Administration said lower crude oil prices and the annual switch from more expensive summer gasoline is fueling a decline in fuel costs.
The forecast expects the drop in gas prices to continue to a national average of $3.18 a gallon by this December. That would be the cheapest for the month in four years.
Because gasoline prices vary across the country, some regions could see even lower prices. In the Kansas City area and across much of the Midwest, gas prices are typically less than the national average. In states like California, they are usually higher than the average.
“Some states could see a monthly average pump price below $3 a gallon at the end of the year,” Adam Sieminski, head of the Energy Information Administration, said in a statement.
Gas prices on the Missouri side of the Kansas City area averaged $3.28 on Tuesday, down from $3.50 a year ago. Because of higher fuel taxes, gas on the Kansas side was $3.35, down from $3.60 a year ago.
The drop so far is enough to put roughly $25 a month in the pockets of the average household.
Gas prices started to weaken in June, after they reached a national average of $3.70 a gallon. By the Fourth of July and Labor Day they had dropped to four-year lows for the holidays.
The fall in prices is “definitely gaining momentum,” said Jim Mosby, a partner at Admo Energy in Kansas City, which helps gas stations buy and manage the cost of the fuel they sell.
The decline was accelerated by falling oil prices. The price of a barrel of Brent crude oil, an international benchmark, has dropped from $114 to $99.25 a barrel on the New York Mercantile Exchange. That’s enough to ease gas prices by 36 cents a gallon.
AAA said this week that declines in gas prices will be helped by the annual switch from summer to winter fuel, which will be completed by Monday. Summer fuels, like the one in the Kansas City area, are more susceptible to tight supplies that can cause prices to rise.
The United States’ growing stature as an oil producer is helping as well. The Energy Information Administration said Tuesday that in 2015, the U.S. is expected to provide nine of every 10 barrels of new oil production in the world.
James Williams, an analyst for WTRG Economics, said the fundamentals of supply and demand are looking good. In August, the U.S. produced 1 million more barrels of crude oil than a year ago. That was enough to meet the increase in worldwide demand.
But there are still concerns. The Organization of the Petroleum Exporting Countries, if oil prices fall much further, may try to curb production. And while oil markets shook off fears earlier in the year about the conflict in Iraq, widening unrest in the country or nearby could rekindle worries about oil supplies from that region.
“The geopolitical stuff is the wild card,” Williams said.
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