New York (CNN Business) — Gasoline prices in the United States continue to fall and could continue to do so, raising the possibility that gasoline will be below $3 a gallon in much of the country before the end of the year.
The national average for a gallon of regular gas stood at $3.96 on Monday, just a fraction of a cent less than on Sunday. Still, that drop sustained a streak of 62 consecutive days of falling gasoline prices.
The average national price has fallen $1.06, or 21%, since hitting a record high of $5.02 a gallon on June 14.
The average price is somewhat inflated by some high-price states, such as California, where the average is $5.37 per gallon. The national median price, which is the price at which half of the country’s gas stations sell for more and the other half for less, has dropped to $3.80 a gallon.
Almost all states enjoy relief from higher prices. Even in states with high gas prices, like California, the average price is down more than $1 a gallon since peaking in June.
In 28 states, the average price of regular is now $3.99 or less. Roughly 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 than that. About 25% of stations across the country sell gasoline for less than $3.50 a gallon.
As students start to head back to school and the summer driving season comes to an end, the price of gasoline is likely to drop even further, said Tom Kloza, global head of energy analysis at OPIS, which tracks American Automobile Association (AAA) prices. He said it’s entirely possible that by September or October, the national average for regular products will be back below $3.53 a gallon, where it was when Russia invaded Ukraine in late February.
And he said Monday’s wholesale gasoline futures for November and December deliveries point to retail prices falling below $3 in many states by the end of the year. But he said there is still a risk that unexpected gas price spikes could derail this good news for drivers.
“We still don’t know what Putin is going to do, or if a hurricane is going to hit the Gulf Coast,” he said of factors that could push gasoline prices back up.
The main driver of the drop in gasoline prices is the drop in oil prices, which hit a six-month low in trading on Monday, as futures fell another 4% on growing concerns about a global recession. . Since June 8, oil futures are down between 24% and 28%, depending on the benchmark crude used.
Recessions can greatly reduce demand for oil and gasoline, as people lose their jobs and don’t need to travel to work, or cut back on spending and travel less. In 2008, the average price of gasoline plummeted 60% between a record price of $4.11 a gallon in July and the end of that year, when the collapse of the financial markets triggered the Great Recession and massive losses of jobs.
Monday’s drop was in part because China’s central bank felt compelled to cut interest rates due to signs of a slowing economy there.
“The market took this as a bearish sign about the outlook for oil demand,” said Richard Joswick, head of global oil supply research at S&P Global Commodity Insights.
There were also signs that there could be a new deal between the US and Iran on nuclear weapons, which could clear the way for Iranian oil exports to return to the market. That was a major factor in Monday’s downward move in oil prices, Kloza said. Other experts also see the news from Iran as a factor pushing down oil prices, even if Iranian oil won’t start flowing freely until 2023.
“If an agreement is reached with Iran, the implications for the oil market and Russia could be far-reaching,” Andy Lipow, president of Lipow Oil Associates, wrote in a note Monday.