Average Gas Price Soon Under $2, Lowest Since Recession

Gasoline is close to breaking below a key psychological barrier as drivers enjoy some of the cheapest pump prices since the recession.

The nationwide average price of a gallon of regular Saturday was $2.02, down 58 cents from this time last year, according to auto club AAA. Experts say it could drop below $2 a gallon in the coming days.

For consumers, this winter is shaping up to be a good one, energy-wise. Forecasters predict warmer weather than normal, and fuel prices are low.

The retail price of heating oil for December through February is expected to average $2.40 a gallon, down 18 percent compared with last year, according to the Energy Department. The price of natural gas for residential customers is expected to average $8.72 per 1,000 cubic feet, down 9 percent.

On the roads, many drivers across the country are already seeing gasoline prices well below $2 a gallon. According to data compiled by AAA and the Oil Price Information Service, drivers in about half of the states are already paying less than $2. South Carolina has the lowest average price at $1.79 a gallon. At the high end, Californians are paying $2.65 and Hawaiians are shelling out $2.76.

The relative bargains at the pump might last a while, because global crude oil supplies are high and demand appears to be weakening. Crude prices fell Friday after the International Energy Agency predicted that demand will grow more slowly next year. The organization expects 2016 growth to be only two-thirds the size of 2015's increase.

Rising production, mostly from OPEC, is also pressuring oil prices. Iran, Iraq and other members of the oil cartel are trying to boost output as they dig out from economic sanctions and wars.

Crude oil futures fell $1.14 to close at $35.62 a barrel Friday on the New York Mercantile Exchange.

Tom Kloza, head of energy analysis for the Oil Price Information Service, said gasoline could go as low as $1.79 a gallon by winter, before rising again next year.

"I do think it will be much higher in the spring," he said, predicting they could rise to $2.75 a gallon.

Refiners often curtail production to perform maintenance on their plants during the slower late-winter and early-spring periods, and that is followed by the annual summer surge in driving. That yearly decrease in supplies and uptick in demand usually pushes prices up as the beginning of summer approaches.

While gas is at its cheapest price in more than six years, some suggest it should be even cheaper.

Jodie Gunzberg, the head of commodities research at S&P Dow Jones Indices, studied monthly prices for crude oil and gasoline going back to 1988. She found that the two generally went up or down about the same. But so far this year, she said, oil prices are down 29 percent while gasoline is down only 16 percent.

If gasoline prices had behaved exactly the same as oil prices this year, she estimates that consumers would be saving another 6 percent at the pump - about 12 cents on every gallon.

Consumers might not complain too loudly, however. Filling up a 20 gallon tank will cost an average of $40.40 this weekend compared with $52 a year ago. And the Energy Department said this week that the average household can expect to spend $570 less for heating oil this winter, while a natural gas user should save 13 percent.