How your upcoming road trip may become more affordable
Posted August 2, 2016
The price of gas is steadily falling to around or even below $2 a gallon, just in time for late summer road trips, according to various news sources.
Gas prices could drop below $2 a gallon for most of the country by November or sooner, with prices already down to the average price of $2.16 for the nation Monday, according to Time.com.
Already more than one-third of the nation’s gas stations are selling gasoline for $2 a gallon or less, with less than 1 percent selling it for more than $3, AAA reported. And these gas prices are likely to remain low for the rest of the summer, with crude oil supplies at their height for this time of time of year for the first time in 86 years.
Still, there are unexpected events that could raise prices, such as supply disruptions, overseas geopolitical tensions or better-than-expected economic growth, AAA noted.
The reason for the gasoline glut isn’t a decrease in demand, CNN.com reported. It's quite the opposite, as July was a record-high month with Americans driving more because of cheap gas prices. Instead, it’s a case of an oversupply.
Bloomberg reported that the global market is “severely oversupplied” with gasoline, with refineries producing too much in recent months. To reduce the overstock, prices have to fall to encourage buyers.
However, Daniel Dicker in a blog post for TheStreet attributed much of the price fall to a corresponding fall in consumer demand, suggesting that Americans are fatigued from auto travel.
“I feel it myself, don't you?” Dicker writes. “If I have a place to go, I dread the almost certain traffic I'm likely to face.”
Aside from price changes, the gasoline glut may mean a longer summer production shutdown for refiners, Bloomberg noted. It may also lead to refiners “scrambling for export market opportunities” to get rid of the excess, Dicker noted.
The oversupply is so great that there are growing reports of diesel and gasoline placed storage on ships at sea, which is the most costly way to store it, CNN.com reported.
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