Could gasoline prices drop to $2 a gallon? The last time they were that low was in late November 2021. Several current conditions could push them that low again.

Oil prices are just below $60 a barrel. They were at a comparable level in late 2021, when they dropped to $20. They were still recovering from the COVID-19 pandemic prices. This was just before the 2022 recession. The consumer price index rose 9.1% in June of that year. Inflation was on fire.

Gas prices depend on oil prices more than any other factor. The world is awash with oil right now, and U.S. shale production is near record levels. OPEC+ has just announced that production will be up again.

These oil price increases come amid what may be a recession. The first quarter’s gross domestic product dropped 0.3%. The University of Michigan’s gauge of consumer sentiment dropped 32% from January to March, which took it to a 35-year low. Economist Joanne Hsu, who works on the index, said, “Consumers perceive risks to multiple aspects of the economy, largely due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming on the horizon.”

However, low gas prices can be a tailwind. The average U.S. household spends $3,000 a year on gas. The U.S. median household income is $80,000, closer to $60,000 after taxes—gas prices at $3,000 dent household spending.

According to Brookings, “How Higher Gas Prices Hurt Less Affluent Consumers and the Economy,” lower gas prices also benefit those with low incomes.

If a recession is on the horizon, low gas prices may dampen its effects.

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