Gas drops below $1.50 in some areas, and we haven't hit bottom yet
American drivers are now enjoying gasoline prices that haven't been this low since January 2009.
Data from the AAA shows that the average annual price for a gallon of gas has been below $2 a gallon for about a month now. Just within the past week, the national average gas price ticked below $1.80 for a gallon of regular gas, a drop of 20 cents just since the beginning of 2016.
"I think you have probably another three to four weeks of prices in this area — I think we could drop another nickel or so," said Denton Cinquegrana, chief oil analyst at Oil Price Information Service. "Around March 1, you're going to see the bottom ... probably around $1.75, maybe $1.74," he said. In some states where gasoline is cheapest, Cinquegrana said drivers could be paying in the neighborhood of $1.50 a gallon.
GALLERY: US gas prices continue to decline:
According to the AAA, Oklahoma is already there. On Monday, prices fell to $1.49 for a gallon of gas. Missouri is right at the $1.50 mark, while prices in Alabama, Arkansas, Kansas and Texas all average below $1.60 a gallon. AAA spokesman Michael Green said via email that nearly 10 percent of the gas stations in the country are now selling gas for less than $1.50.
Patrick DeHaan, senior petroleum analyst at GasBuddy.com, predicted that the national average price of gas this year will be $2.28, delivering $17 billion in savings at the pump compared with what drivers paid last year.
"Oversupplied market conditions will continue, and that's a big factor why gas prices are likely to stay lower than they did last year," he said.
A host of circumstances are contributing to this glut. China's economic slowdown is reducing global demand for gasoline, OPEC member nations have debated — but not yet implemented — production cuts and American shale oil producers have improved their extraction processes.
"The Saudis who started the whole era of low oil prices in 2014 have miscalculated how much more efficient U.S. producers have become," DeHaan said. "Even though the number of oil rigs is declining ... shale producers have become more efficient."
Analysts do expect prices to rise by summer, as more people take to the roads and as refiners produce more expensive summer-grade gasoline, but most of the country will still see highs well below $3 a gallon. According to GasBuddy's Fuel Price Outlook 2016, we'll end the year about where we began, with an average nationwide price of $2.01 a gallon.
"Yes, by definition it is a spike, but it's not going to spike to $3 or $3.50," Cinquegrana said.
"Market fundamentals remain unchanged and a 'lower-for-longer' sentiment is beginning to prevail amongst speculators," the AAA said in a recent report. For drivers, that's the best news they could get.