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Crude Economics
Pinch Yourself—a Gallon of Gas for Less than a Buck?

For most Americans, sub-$1 gas prices are nothing but a distant memory, and younger generations will find it hard to believe that anyone ever paid so little at the pump. But analysts believe that drivers in certain Midwest markets might enjoy that blast from the past in the very near future, as Bloomberg reports:

Average Illinois retail gasoline prices have dropped 34 percent in the past year to $1.57 a gallon, while Oklahoma motorists can fill up for a $1.36 a gallon, according to GasBuddy Organization. If gasoline supplies keep growing, 99-cent fuel is not out of the question, said GasBuddy, which tracks prices at filling stations. […]

The chance for 99-cent fuel is possible during the next few weeks before the summer driving season begins, Michael Green, a spokesman in Washington for AAA, said in a phone interview. “We may have some stations offering gas below $1 per gallon for marketing purposes, but the chances of a station offering under $1 are going to decrease pretty soon.”

This, of course, is a direct effect of the global oil glut. Awash in supplies, the oil market has seen prices collapse over the past 20 months, and during that time gasoline prices have edged steadily downward. Just last month the national average dipped under $2 per gallon for the first time since 2009.

But depending on where you live, prices still vary considerably thanks to differences in state taxation. Drivers in the Midwest might be giddy at the prospect of paying for their gasoline with loose change in the coming months, but these cheap prices won’t be coming to California: High taxes and regulations ensure that Californians will continue to pay too much for gas no matter how much crude U.S. shale producers pump, or how crazy the OPEC price war gets.

For others of us, and especially those of us living in the Midwest, filling up is feeling a lot less like a chore these days.

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