The coronavirus pandemic and a Saudi-Russian price war have fueled this gas price drop in recent weeks -- and it could go lower.
Gas prices have taken a dramatic plunge in recent weeks, with some stations offering fuel for less than $1 a gallon. Now, the national average has dropped below $2 per gallon, which is something the US hasn't seen since 2016. The last time we saw a sustained period of gas below $2 per gallon was all the way back in 2004.
According to AAA, the average gas price in America fell to $1.97 on Tuesday, continuing a downward trend that's been going on for weeks. One month ago, the average price for gas in the US was $2.45. AAA expects the average price likely continue to fall as low as $1.75 per gallon on average.
The state with the lowest average gas price as of March 31 is Oklahoma, at $1.55 per gallon, according to AAA. On the other end of the spectrum, the state with the highest average is Hawaii, at $3.36 per gallon. In the mainland US, California leads the country with a statewide average of $3.05 per gallon.
Two big factors are responsible for this drop in gas prices. First, there's COVID-19, the disease caused by the coronavirus. As we work to control the spread of this disease, people around the country are being urged to stay home, with some states even implementing lockdown orders, closing many businesses and canceling events. Less daily travel means lower demand for fuel.
Another big factor here is a price war for crude oil that Saudi Arabia initiated with Russia, slashing prices to reflect this lower demand. Some analysts have said this could result in a surplus for crude oil in the supply chain.
It's unclear how long we'll get to enjoy the benefits of cheap gas, or what effects all of this will have on the car industry as a whole. It all depends on how the pandemic evolves.