Gasoline prices have begun to crater in some parts of the United States to under $2 a gallon. That almost certainly will spread throughout most of the country as oil prices have collapsed to close to $30 a barrel.
Benchmark West Texas Intermediate crude was $53 a barrel at the end of February, after a modest slide since the start of the year, when they were at $63. The price is now basically half of that. Goldman Sachs recently forecast the price of oil could sink to $20.
OPEC has ramped up production, immediately after it failed to reach a deal to bring down production in concert with Russia. Many experts believe this is a sort of retaliation. Neither Russia nor OPEC seems to care. As a byproduct of this, U.S. frackers face financial hardship, but they do not appear to have cut production in any meaningful way in the past few days.
It is notable that experts believe OPEC makes money as long as oil is above $8 a barrel.
The price for a gallon of regular gas has already dropped to under $2 in some parts of the United States. In areas of North Carolina, they have fallen under $1.80. The price in northeast Ohio also is below $2. These are anecdotal, so it is best to look at gas prices across several states.
AAA puts the national price average at $2.38 a gallon. However, it notes that in several states the per-gallon price is down over 10 cents in a matter of days. GasBuddy shows that prices are below $2.10 in Oklahoma, Mississippi, Texas, Louisiana and South Carolina. In some cities in those states, prices are already down to $1.90. That includes Oklahoma City, Dallas and Austin.
Across a large number of states where gas is below $2.20, there are already highly populated areas with $2 gas.
Over 60% of the price of gas is determined by oil prices. Refinery and transportation costs and taxes make up the balance. Those other fees will not matter as much if oil stays down near $30, about half of what it was at the start of the year.
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