The world is awash in so much crude oil that it's running out of places to put it. But one upside for U.S. consumers has been gasoline prices, which dropped below $2 per gallon over the weekend just as Americans headed into one of the busiest road-tripping seasons of the year.
The national average price at the pump fell to $1.999 per gallon on Saturday afternoon, down from $2.44 this time last year, according to price-tracker GasBuddy. Even in the more costly regions of the country, such as New York and Washington State, a gallon of gas is well below $3. California is the only state where the average is above $2.50 right now.
Crude oil (both Brent and WTI) has lost nearly 70 percent of its value over the past 18 months because of overproduction by the U.S. and other oil-producing countries. OPEC members have kept the crude taps flowing in a defensive move against rivals whose drilling activity costs them more. Meanwhile, gasoline refiners have snatched up cheap crude amid the glut, sending gasoline into global markets.
Brent crude prices touched an 11-year low on Monday, their weakest since July 2004, according to Reuters, before they rebounding slightly.
Energy prices are down about 14 percent over the past 12 months with gasoline prices off by nearly 25 percent vs. last year, according to U.K.-based Oxford Economics. The average nationwide price for gasoline was $2.44 at this time in 2014.
“The weight of lower energy prices on overall inflationary trends remains heavy,” Gregory Daco, head of U.S. macroeconomics at Oxford Economics, said in a research note released Friday.
On Monday, West Texas Intermediate crude oil, the U.S. benchmark for oil prices, shed 1.18 percent to $34.32 per barrel for January delivery on the New York Mercantile Exchange. Brent crude, the global benchmark for oil prices, fell 1.22 percent to $36.43 for February delivery on the London ICE Futures Exchange.