by Shariq Khan
(Reuters) – U.S. gasoline prices are at their lowest since January and could fall below $3 a gallon by Christmas for the first time since 2021, analysts said, which should boost consumer confidence during the holiday shopping season. .
The national average price of a gallon of gasoline was $3.23 on Tuesday, down 15% from mid-September, data from motorist group AAA shows. Lower pump prices have given US consumers some relief from inflation and left more cash for discretionary spending.
“Low gas prices this year have allowed me to invest more in my small business than I did last year,” said Macy Ropes, owner of a tie-dye clothing store in Lafayette, Indiana.
The tamer fuel bill has also helped him set aside money for personal shopping and travel during the holidays, he said.
Gasoline prices in Indiana averaged $3.008 a gallon on Tuesday, about half a dollar cheaper than last year.
Benchmark global oil prices fell to their lowest level since July on Tuesday as traders remain concerned about China’s economy. Oil prices fell despite OPEC+, the Organization of the Petroleum Exporting Countries, and its allies announcing fresh oil supply cuts on Thursday.
Global oil supplies are less strained than in the months since the war in Ukraine began.
The cost of crude oil is the largest component in determining retail gasoline pricing. US West Texas Intermediate crude futures closed at $72.32 a barrel on Tuesday, down nearly 10% this year.
U.S. refiners have increased gasoline production since last year, which has helped build inventories in recent months.
Total U.S. motor gasoline inventories as of Nov. 24 stood at 218.18 million barrels, up 2% from a year earlier and the highest for this time of year since 2020, according to Energy Information Administration data.
The national average price of gasoline is set to drop by half a percent per day by the end of the year. That could bring it below $3 a gallon for the first time since early 2021, said Andrew Gross, a spokesman for the American Automobile Association.
Falling gasoline prices could boost the consumer confidence index, which rose for the first time in November after three consecutive months of decline.
“The argument is that gasoline rising to $4 a gallon hurts consumer psyche, so a drop to $3 should help keep it strong,” said John Kilduff, partner at New York-based Again Capital.
(Reporting by Shariq Khan; Editing by David Gregorio)