Gasoline prices are approaching the $3 threshold as oil prices fall, demand declines, and cheaper driving fuel blends begin to appear.
The average price of driving fuel in the United States fell to $3.06 per gallon on Wednesday, down $0.05 from a week ago and down $0.14 from last year, according to AAA. This marked the lowest level since January.
“Americans appear poised to see the national average fall below $3 a gallon and potentially stay there for the first time in years,” Patrick De Haan, head of petroleum analysis at GasBuddy, said earlier this week.
Western states such as Oregon, Washington and California continue to see prices above $4 per gallon due to higher fuel taxes and fees. But more than two dozen states near the Great Lakes area, the Midwest, and the Gulf Coast are seeing averages well below $3 per gallon, and even steeper declines are expected.
“We could even see a handful of stations in places like Oklahoma, Texas or even Wisconsin drop below $2 per gallon in the coming weeks, something not seen since the pandemic,” DeHaan wrote.
The declines come amid waning demand, as refiners have switched to cheaper fuel blends for the slower winter driving season and oil prices hover around their lowest level since May.
West Texas Intermediate (CL=F) recently fell below $60 per barrel as President Trump renewed his tariff threats against China, hurting demand prospects.
Additional supply from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), along with progress on a Middle East peace framework, has also fueled concerns about oversupply.
Citi analysts warn that weak “gasoline demand remains a key obstacle” heading into 2026 and 2027.
“Weakness arises from improving vehicle efficiency and a growing fleet of electric vehicles, particularly in the United States and China,” a Citi analyst note said on Wednesday.
The Energy Information Administration expects gas prices to average $3.10 per gallon this year, $0.20 less than last year.
The agency also expects prices to drop further in 2026 to an average of $2.90 per gallon.
Inés Ferré is a senior business reporter at Yahoo Finance. Follow her on X in @ines_ferre.
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