Now’s the time to plan that cross-country road trip.
Summer gas prices haven’t been this cheap since 2004 — and there are growing signs they could slip even lower.
As you might have guessed, cheap gas is being fueled by sub-$50 oil prices. But there’s another hidden force at play: a serious oversupply problem. It seems that the well-chronicled glut in crude oil has spread to gasoline and other products.
Despite the fact that it’s the heart of summer driving season, the U.S. is sitting on 241 million barrels of gasoline in storage. That’s the highest level for this time of the year since the government began tracking this metric in 1990.
In fact, the only other times that gasoline stockpiles were this lofty were in the dead of winter, in early 2015 and early 2016, when Americans drive far less.
Here comes $2 gasoline?
That’s music to the ears of American drivers. Nationwide, average gas prices dropped to $2.18 a gallon on Friday, according to AAA. Compare that with $2.32 a gallon last month and about $2.75 this time last summer. Tom Kloza, global head of energy analysis at the Oil Price Information Service, predicted that gasoline prices could soon dip below $2 a gallon for most of the country.
“We’re going to have a chapter of very, very cheap fuel,” Kloza said.
The excess gasoline sloshing around in storage tanks should also provide a nice buffer for consumers in case a major storm disrupts the energy industry this hurricane season.
So why are gasoline inventories so high? It’s not because there’s less demand. Kloza said July was a record-high month as Americans guzzled on cheap prices by driving more.