$3 gas is becoming a thing of the past
Boom in oil production helps keep prices low
For many American motorists, $3a-gallon gasoline is becoming a distant memory.
Americans are likely to pay an average of $2.60 a gallon in 2020, according to fuel savings app GasBuddy‘s annual forecast.
On the whole, drivers haven’t paid more than $3 nationwide since 2014, when prices averaged $3.36, according to the U.S. Energy Information Administration. (Prices along the West Coast and in Hawaii have skewed higher.)
“It’s another good year for Americans to pump,” said Patrick DeHaan, head of petroleum analysis for GasBuddy. “I would not expect the national average this year to hit $3.”
The highest national average price of gas was $4.11 on July 17, 2008, according to AAA.
Why has the average cost of gas been below $3 for so long? The main reason is the nation’s oil boom, coupled with increases in output in other countries.
U.S. oil production spiked 38.6% from 8.84 million barrels a day in 2016 to 12.25 million in 2019 and is likely to rise to 13.18 million in 2020, according to the EIA.
The United States produces so much oil that it exported more than it imported in September, the first month that has happened in recorded history.
Emboldened by the strong economy and relatively low gas prices, Americans buy bigger vehicles and drive longer distances.
Total vehicle miles traveled reached an all-time high in October, the latest period in which statistics were available, according to the U.S. Federal Highway Administration. The 12month moving average was 3.25 trillion miles in October, up 7.9% since the same point in 2014.
The lack of volatility in gas prices has played a big role in America’s SUV boom. SUVs represent about half of new vehicle sales, according to car buying research site Edmunds, while passenger cars make up about 3 in 10.
Despite the projected low gas prices, don’t expect 2020 to pass without a few sharp swings. GasBuddy projected that prices would hit a low point of $2.41 in February, then rise to a peak of $2.84 in May.