Gasoline prices have fallen below $2 in several U.S. cities, and near that level in some states, as oil inventories swelled above expectations, providing a windfall for motorists as Americans take to the road for vacations this summer.
Three of the five cities with average gas prices under $2 are in South Carolina: Greenville, Spartanburg and Columbia, according to GasBuddy, which tracks the price of fuel across the nation. The other cities are Tulsa, Oklahoma, and Chattanooga, Tennessee.
At $2.01, South Carolina has the cheapest gasoline on average of any state, according to GasBuddy. The price of gasoline has slipped under $2.10 in five other states: Oklahoma, Alabama, Mississippi, Arkansas and Tennessee.
At the other end of the gasoline price spectrum, the costliest fuel is found in California, which has the 17 most expensive markets. Fourteen cities have an average gasoline price of more than $3, with San Francisco the steepest at $3.26.
Among the other primary contributors to gas prices are state taxes and levies. The federal excise tax is $0.184 cents a gallon. The average state gas tax is $0.495. South Carolina’s tax is the second lowest in the country at $0.315.
Most states have kept gas taxes flat for years. A recent exception is New Jersey, which boosted its gasoline tax by 23 cents in October, the first increase in the tax levy in that state since 1988. The state had had the second-lowest gasoline tax in the nation.
The price of gasoline is likely to continue to fall. On Wednesday, the Energy Information Administration reported that domestic crude supplies unexpectedly climbed by 3.3 million barrels for the week ended June 2, ending eight straight weeks of declines. This led to a 5% drop in the price of oil Wednesday.
The rise in oil inventories this week was tied to an increase in imported oil and lower-than-expected demand for gasoline.
For the 2017 summer driving season, the EIA forecasts U.S. regular gasoline retail prices to average $2.46 a gallon, compared with $2.23 last summer.
The price of oil initially surged at the beginning of the week when Arab nations, including Saudi Arabia and Egypt, cut diplomatic ties with oil-rich Qatar, but the price gain stalled later in the day.
OPEC and Russia agreed to extend oil-production cuts this week, but the surge in U.S. oil production as well as the decision by Royal Dutch Shell PLC (NYSE: RDS-A) to lift restrictions on exports of a key Nigerian crude oil, are pushing back against the upward pressure on the price of oil.
Major banks such as Goldman Sachs have started slashing their oil price forecasts for this year and next, doubting the OPEC deal can rebalance markets. JPMorgan slashed its 2018 forecast for West Texas Intermediate crude by $11 to $42, according to Oilprice.com. JPMorgan said U.S. crude output is expected to keep growing for several quarters because of lower breakeven costs and higher investment.
The price of crude slipped 29 cents to $45.43 in New York this morning.