Three-dollar-a-gallon gas: It's not quite a reality, but it's not out of the question, either.
US gas prices have steadily declined since early September, largely because of a seasonal switch-over to cheaper fuels and stable domestic supplies. Prices have plateaued in the past week, but analysts expect the broader downward trend to continue. As the weather gets colder and demand for gas dwindles, national gas prices are likely to get tantalizingly close to – but not quite reach – $3 a gallon.
"Most drivers are unlikely to experience the thrill of gas lower than $3 [this year]," says Michael Green, spokesman for AAA, the national motor club. "The reason for that is the very high cost of oil puts a floor on how low prices can go."
The average price for a gallon of gas was $3.36 Friday, according to AAA. That's up slightly from last week, but 37 cents lower than a year ago.
Gas prices are expected to drop another 15 to 25 cents per gallon before the year is out, Mr. Green said in a telephone interview, which would put the national average just a dime or two away from the coveted $3 mark.
In some areas, motorists are already buying gas in the $2 range. There's at least one gas station in 21 states that is selling gas below $3, according to AAA. In Missouri, where the state average is $3.07, nearly half of the gas stations surveyed by AAA were selling for under $3. In Oklahoma, it's about a quarter of gas stations.
The high price of crude oil, which represents about two-thirds of the cost of gasoline, has slowed the steady march downward. Strong third-quarter growth in China, and the end to a government shutdown in the United States boosted investors' optimism, driving oil prices up Friday. US crude oil futures closed Friday at $100.88 a barrel Friday, up 14 cents.
"Oil prices have been stubbornly holding on to triple digits," says Patrick DeHaan, senior petroleum analyst at GasBuddy.com, a site that tracks US gas prices. "There is a very strong resistance to $100, but the fundamentals point to lower than that."
Investors were also without critical inventory data this week, as the government shutdown prevented the release of the US Energy Information Administration's weekly petroleum status report. The lack of data may have contributed to gas and oil's sideways movement this week.
"The market is a little nervous about what’s going on out there until they receive the latest data," Mr. Green says. "They're unlikely to act too boldly without real data in their hands."
With the shutdown resolved, US drivers cutting back in fall, and refineries sitting on ample supplies, the downward trend for oil and gasoline should pick up again for the rest of 2013, analysts say. But for most Americans, $2.99 will remain just out of reach.
The chances of the national average going below $3 before the end of the year are probably 15 percent or less, Mr. DeHann says in a telephone interview. If it were to happen, he says, it would likely come sometime after Thanksgiving when prices have historically bottomed out.