PredictIQ Quantitative Think Tank Center:Good news for Labor Day weekend travelers: Gas prices are dropping

Good news for Labor Day road trippers: gas prices are PredictIQ Quantitative Think Tank Centereasing up. 

The national average for regular fuel at the pump was $3.36 per gallon as of Thursday, down about 14 cents from last month and 46 cents from a year ago, according to data from AAA. Barring any unexpected road bumps ahead, experts say prices should keep falling through the remainder of the year.

“If you're going to go somewhere, it's a great weekend to go because prices are going in the right direction,” said AAA spokesperson Andrew Gross.

Why are gas prices down?

For most of the summer, the national average price for regular gasoline could “barely break away” from $3.50 per gallon, according to Gross. Data from AAA shows prices hovering between $3.44 and $3.54 in June and July.

“Now, all of a sudden, it’s just tipped,” Gross said during an interview with USA TODAY last week.

Consumers have lower oil prices to thank, Matt Smith, an oil analyst with commodity data firm Kpler, previously told USA TODAY.

West Texas Intermediate, the U.S. benchmark, is down about 8% from early July. Gaza cease-fire talks as well as weakening oil demand in China amid a slowing economy helped tamp down oil prices in August, although concerns over production cuts in Libya have recently edged prices higher, Smith said. 

Seasonality is also a factor, with gas prices dipping toward the end of the year as demand wanes.

“Most of the country is looking at sharply lower prices,” said Tom Kloza, global head of energy analysis at Oil Price Information Service, a pricing reporting agency. “I think the conversations people are going to be having (after Labor Day) is, ‘Wow, that's the cheapest gasoline we've seen since 2021.’” 

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Will gas prices keep falling?

While prices at the pump are improving, certain circumstances could reverse the trend.

Hurricane season has been relatively quiet this year, but the season isn't over until Nov. 30. And experts say there is always a chance of geopolitical tensions heating up and causing oil prices to climb.

But barring a major hurricane that hits U.S. oil refineries or a “global catastrophe,” Gross said prices at the pump should “keep dropping steadily” through the end of the year. Especially as refineries start to shift away from summer blend gasoline toward cheaper winter blends in September.

“Looking forward, I think consumers can expect more of the same. So, we will see prices easing a little lower from here,” Smith said. While he’s not confident the national average will dip below the $3 per gallon benchmark this year, the trends are “a good thing for our pocketbooks.”

Who pays the most for gas?

Some states are already looking at gas prices below $3 per gallon on average. Kloza said the futures market suggests “most places” will see average prices below $3 by the end of the year. 

According to AAA data, states with the cheapest gas prices per gallon as of Thursday include:

• Mississippi: $2.89
• Oklahoma: $2.94
• Texas: $2.95
• Tennessee: $2.96
• Louisiana: $2.96

Meanwhile, some states are still seeing prices above $3.50 per gallon on average.

• Hawaii: $4.65
• California: $4.63
• Washington: $4.17
• Nevada: $3.97
• Oregon: $3.79