Why gas prices are likely to keep falling
The national average of gas prices keeps falling. Prices are expected to reach their lowest Labor Day levels in a decade. In a lot of the country, the price at the pump is inching under $2 a gallon, which is leading a lot of Americans to take road trips this weekend.
Labor Day normally signifies the end of summer, as kids are back in school and days get cooler. And now that gas is cheaper, people have more money to spend on other stuff. But Patrick DeHaan with GasBuddy.com says even if gas prices were a dollar higher, like they were last year, Americans would still be hitting the road.
“Low prices certainly spawn some demand,” he says. “But it’s mostly during the warm season that we see that additional demand, and far less in the winter.”
But there might be a tipping point where gas is considered cheap. David Spence, a professor of law and regulation at the University of Texas, thinks it might be $2.
“But I don’t think of it as necessarily a threshold issue,” Spence says. “The lower the price goes, the more we drive, and that’s traditionally been true.”
The glut in crude oil is spurring lower gas prices. But Patrick DeHaan says it’s a little more complicated.
“Everyone is obsessed with the price of oil,” he says. “But some do forget that that oil must be refined before it’s something we can fill our tanks with.”
And after Labor Day, refineries will be able to switch to a cheaper blend of gas, which means prices will probably keep dropping.
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