At long last, gas prices are primed to plunge — and beyond the typical dip at this time of year.
According to AAA, the average gas price today is about $3.38 per gallon of regular, which is considerably high but down 2 cents from last month. At this time last year, gas prices were about $1.25 cheaper. Analysis from GasBuddy, which pulls pricing data from more than 150,000 gas stations nationwide, shows that gas prices have fallen for the third consecutive week, indicating that prices are at least trending in the right direction for drivers.
A steeper drop could also be on the horizon as prices for crude oil plummeted as much as $10 a barrel Friday following news of the new Omicron variant of the coronavirus.
“Gas price declines are slowly picking up momentum. With oil’s recent fall and the jury out on a new Covid variant, Omicron, we could be in store for lower prices based on many countries turning back to travel restrictions, limiting oil demand and potentially accelerating the drop in gas prices,” Patrick De Haan, GasBuddy’s head of petroleum analysis, said in a statement.
This means drivers could finally see some relief from sky-high gas prices, which are historically supposed to fall in the cooler months as gas stations switch to a cheaper version of fuel around wintertime. Instead, gas prices in October hit a seven-year high and even eked slightly higher throughout November.
How lower oil prices result in cheaper gas prices
The U.S. Energy Information Administration (EIA) says that the retail price of gas is comprised of four main factors: crude oil costs, oil refining costs, distribution and marketing costs, and taxes. Of the price you pay at the pump, the EIA says as much as 56% goes toward the wholesale cost of crude oil.
In other words, when crude oil prices drop, so do gas prices for everyday drivers — albeit with some lag time.
To combat the surging gas prices, President Biden ordered a release of 50 million barrels of crude oil from U.S. stockpiles ahead of Thanksgiving, but experts are attributing the tumbling oil prices largely to the Omicron variant — and not the president’s recent actions.
As the Associated Press noted, oil prices actually jumped 2% immediately following Biden’s announcement. In contrast, oil prices plummeted more than 10% after the news of Omicron broke.
It’s unclear how far retail gas prices will fall as a result of tumbling crude oil prices. But if the oil market sustains even part of the losses from last week, that can translate into cheaper prices at the pump.
More From Money:
Rates are subject to change. All information provided here is accurate as of the publish date.