NEW YORK (Reuters) – The last time it was so reasonable to drive by Thanksgiving Day, there was almost no one on the roads.
Just in time for the peak Thanksgiving season, fuel costs are dropping rapidly.
The national average price for regular gasoline has fallen 55 cents per gallon over the past two months to $3. 33, according to AAA. This exceeds the typical seasonal drop in gasoline prices in the fall and leaves the national average at a 10-month low.
If prices stay near current levels, it would be the cheapest fuel for Thanksgiving since 2020, when Covid-19 caused many Americans to stay off the roads altogether. That year, the national average was just $2. 12 a gallon, though many other people didn’t deserve it.
A sharp drop in the oil market on Thursday, described by a Wall Street bank as a “bloodbath,” means fuel costs may continue to fall in the coming days.
GasBuddy predicts the national average will fall to $3. 25 per gallon or less through Thanksgiving, marking the lowest Thanksgiving for fuel in 3 years.
By comparison, fuel costs were a consistent $3. 57 per gallon last year’s holiday, following a year of notoriously high costs. In June 2022, the national average surpassed $5 per gallon for the first time.
Americans will spend $1. 2 billion on gasoline
It’s a far cry from Labor Day weekend, when fuel costs were near their holiday levels.
GasBuddy expects Americans to spend $1. 2 billion less on fuel the week of Thanksgiving compared to last year.
And it’s not because other people drive less. In fact, AAA predicts that just over 49 million Americans will drive to their destination this Thanksgiving, up 1. 7% from 2022.
All of this provides a boost to reduce the cost of living. After two years of peak inflation, consumer value growth is finally returning to healthier levels. Even the cost of a Thanksgiving meal, even though it’s all going down.
Americans are sensitive to fluctuations in fuel prices.
“It’s a time of year when many Americans are more price-conscious before the holidays,” said Patrick De Haan, head of petroleum research at GasBuddy.
None of this is to say that inflation in general, or fuel in particular, is low.
Gas costs were much cheaper before Covid. The national average for regular fuel was $2. 59 per gallon on Thanksgiving Day in 2019, according to AAA.
Why are the bombs falling now?
Just a few months ago, refinery disruptions and OPEC’s competitive source cuts helped push oil costs to just around $100 a barrel.
Since then, considerations have arisen about demand in China. Oil reserves have also increased.
U. S. oil costs fell 5% on Thursday alone, falling to a four-month low of $73. 58 per barrel. Crude recovered above $74 on Friday but is still down more than 20% since last September.
Analysts at RBC Capital Markets described the drop as a “bloodbath” and said that while the sell-off is partly due to hedge funds, there are basic reasons for it. “We cannot forget the fact that lately there are signs of expanding physical availability of rough diamonds in the market,” RBC said.
In other words, there is an oversupply problem.
Gasón for more than $3 down the road?
Of course, that could be replaced in the blink of an eye in a booming oil market.
Other measures through Saudi Arabia to drastically reduce production or supply disruptions, similar to those in the Israel-Hamas war, could lead to a spike in oil costs, which would also lead to higher costs at the pump.
But for now, fuel prices are falling, giving consumers a boost ahead of the holidays and helping cool inflation signals that investors and Federal Reserve officials are watching closely.
Drivers in 10 states even pay less than $3 per gallon for gas, and GasBuddy’s De Haan believes this regional trend would likely spread nationwide.
“It’s clear that we may see fuel sell for less than $3 before the end of the year,” De Haan said.
By Matt Egan, CNN
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