National Gas Average Set to Break Below $4 Amid Crude Slump

The national average price for gasoline is projected to fall below four dollars per gallon by next week, ending a stretch of high costs for American drivers. Patrick De Haan, a petroleum analyst at GasBuddy, said that the current average of $4.06, recorded on Thursday, is expected to dip under the $4 mark within the coming days. De Haan also anticipates that diesel prices will drop below six dollars per gallon before the Thanksgiving holiday.

This decline follows weeks of falling prices for both gas and diesel. De Haan attributes the trend to market expectations that the United States would express public dissatisfaction with the war in Iran. This sentiment has increased pressure on the Trump administration to negotiate a deal to end the conflict, which has helped stabilize energy markets. Additionally, oil prices have trended downward as the midterm elections approached, driven by optimism that political issues would be addressed after the vote.

Supply dynamics are also influencing costs. De Haan noted that oil tanker traffic through the Strait of Hormuz has increased, easing constraints on the global oil supply and making more crude available to the market. Benchmark crude prices reflect these shifts. Brent crude, the international benchmark, fell below $100 per barrel on Thursday for the first time since September. By midday, it traded at $97.44. West Texas Intermediate, the primary U.S. Benchmark, traded at $90.42 per barrel during the same period.

Seasonal factors are contributing to the reduction. De Haan observed that gas prices typically dip in the fall as Americans reduce road trips and summer travel. Filling stations are also beginning to switch to winter blend gas, which is generally less expensive to produce than the summer blend, further lowering pump prices.

Tom Kloza, chief energy adviser for Gulf Oil, shares the outlook for lower prices. He predicts the average U.S. Gas price will sink below $4 within the next 10 days. Kloza highlighted that the profit margin gas stations earn on each gallon sold is currently approximately 75 cents, a level he described in an email as historically too outsized. A more normal markup would be around 40 cents per gallon. Consequently, he argued that pump prices should continue to decrease even if futures and physical markets remain at their current levels, due to these margin adjustments.

The Trump administration has employed strategies to ease gas prices, including expanding access to fuel sources and opening doors to new supply options. The administration also waived a federal statute known as the Jones Act. This law requires that goods shipped between U.S. Ports be transported on ships that are U.S. Built, U.S. Flagged, and U.S. Crewed.

The national average for gasoline stood at $4.06 on Thursday, while Brent crude traded at $97.44 and West Texas Intermediate at $90.42.