Future49 board member Bob Griffin discusses the amount of natural gas in Alaska amid the Trump administration’s plans to open millions of acres to new oil and gas development by rolling back a Biden-era rule.
According to a recent analysis from AAA, gas prices could fall to the $3 mark for the first time in four years as increasing oil supply drives crude oil prices sharply lower.
The national average price for a gallon of gasoline fell to $3.05 last week due to falling crude oil prices, lower demand for gasoline and cheaper winter gasoline at the pump, according to AAA. The last time the national average reached $3 per gallon was May 2021.
As of Tuesday, West Texas Intermediate (WTI) futures are trading around $57 per barrel.
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Cheaper oil prices benefit consumers as crude oil makes up the majority of the cost of a gallon of gasoline. According to the Energy Information Administration (EIA), it currently represents 51% of the price of gas.
The last time the national average reached $3 per gallon was May 2021. (Brandon Bell/Getty Images)
AAA’s report is in line with EIA forecasts in September, which expect the average retail price for regular gasoline in the U.S. to be about $3.10 per gallon for the remainder of this year and $2.90 per gallon in 2026.
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Lipow said OPEC+ has reinstated its voluntary production cuts over the past two years, increasing supply in the market. At the same time, Lipow said domestic production has reached a record level of more than 13.6 million barrels per day, with additional supplies coming from Brazil, Guyana and Argentina.
The national average price for a gallon of gasoline dropped to $3.05 last week. (Daniel Acker/Bloomberg via Getty Images)
“The result is an abundance,” Lipow said.
He cited the EIA’s global oil supply estimates, which show that supply is expected to grow by 3 million barrels per day in 2025, while demand will grow by only 700,000 barrels per day.
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“Oil prices have fallen dramatically in recent weeks as the market sees a growing surplus accumulating on floating storage – i.e. tankers loaded with oil that have nowhere to go,” Lipow said, adding that China has sucked up much of the surplus by filling its strategic storage at these low prices.
Reduced global tensions, especially in the Middle East, are helping to lower oil prices. (Patrick T. Fallon/AFP via Getty Images)
Lipow expects the national average price of gasoline to reach $3 per gallon in the coming week.
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He also noted that reduced global tensions, especially in the Middle East, are helping lower oil prices. Instability in the region can affect oil markets as traders often react to regional risks.
