American drivers, rejoice! The average U.S. gas price yesterday dropped below $2 per gallon for the first time in six years. The Hill reports:
The average gas price on Monday morning was $1.998 per gallon, [said AAA], or about 41 cents cheaper than one year ago. The last time prices were this low across the United States was March 25, 2009.
Gas prices traditionally fall during the winter months because people use less fuel. But AAA said they are particularly low this year because of high gasoline supplies and low oil prices around the world. The group expects the low prices to last through at least January before rising later on in the winter. Prices could drop further, however, if crude oil remains low.
AAA said the average price of a gallon of gas may not go above $3 per gallon next year due to low crude oil prices and high supplies.
So what’s behind these discounts at the pump? Domestically, we can look to shale production for some explanation: U.S. oil production is averaging well over 9.3 million barrels of crude per day so far this year, a far cry from the 2000s when daily output generally stayed between 5 and 6 million barrels per day. Fracking has bolstered American oil production, which has in turn helped bring down the prices of refined petroleum products like gasoline.
Of course, American shale firms aren’t the only producers contributing to what today is a considerably oversupplied global oil market. OPEC’s petrostates have kept output up in the face of falling prices, as has Russia (recently nearing post-Soviet highs). And with China’s slowing economy weakening global demand, oil prices have plunged from a high in June 2014 of more than $115 per barrel down to just $36.17 today.
Cheap oil has plenty of geopolitical consequences, but it affects average Americans, too. As drivers take to our nation’s highways to visit family this holiday season, they’ll be spending less on gas than they have since 2009. It’s hard not to read that as good news.