Crude oil prices have fallen into bear territory, down 20% in just over a month, to under $60 a barrel. Drivers are always beneficiaries of low oil prices. After a run toward $3 per gallon on average nationwide, prices in some areas have backed toward $2.
Low gas prices are available where they are most often found—in states near the Gulf of Mexico and close to the huge refineries, particularly around Houston. The prices for an average gallon of gas in Texas, Oklahoma, and Lousiana are below $2.40. Across parts of these states, the price has fallen close to $2.
Prices are just a few pennies above $2 in parts of Baton Rouge and New Orleans in Lousiana. In Oklahoma, the low prices are clustered around Oklahoma City and The Villages. Some Oklahoma City prices have already fallen to $2.01. In Texas, the price is already below $2 in Katy, Pearland, and Webster.
Several forces will almost certainly drive down the price of oil more. Among these is the huge production from shale fields in the northern Plains states. Russia and Saudi Arabia may cut output next year, but for the time being, they continue to flood the market. The International Energy Agency has cut its forecast for global demand to some extent because national economies around the world, led by China, are seeing a slowing of their GDP growth.
Some areas of the U.S. will also benefit from low gas tax rates. In most states, these have not risen for years. An analysis by the American Petroleum Institute issued last month shows the average state tax among all states is $0.542. However, that figure is $0.384 in Texas and Oklahoma and $0.3841 in Louisiana. The tax is even lower in Missouris ($0.3575), Mississippi ($0.3791), and Arizona ($0.374)
Finally, Moody’s issued a report which says that oil refinery production capacity has risen recently. The companies that own these have a chance to improve profits because of rising production. They also operate larger refineries that have become more efficient over the last several years. The Energy Information Agency reported last week that U.S. refineries are operating at 90% of capacity.
While refinery capacity and gas taxes will continue to contribute to low gas price, the dominant factor will continue to be oil. If the price continues to fall, and many experts believe it will, gas prices across a large part of the U.S. could be at $2 before Christmas.