Gasoline prices may fall fall below $3 per gallon in the U.S. for the first time since May 2021.
The national average price of gas was $3.07 on Friday, marking its lowest point in 2023, according to GasBuddy.
Gas prices were down 8.9% year over year and down 6% compared with October.
The average price of a gallon of regular unleaded gas is now below $3 in 29 states, according to GasBuddy.
Gas prices hit family budgets and can affect consumer sentiment indicators about the state of the economy. The decline is also a significant factor in the broader decline in U.S. inflation in 2023.
Several factors have led to lower prices in recent weeks, including concerns about China’s economy, record U.S. oil production and traditional seasonal patterns, Patrick De Haan, head of petroleum analysis for GasBuddy, told Axios.
Consumer prices overall rose slightly from October to November, but the fall in the price of gas helped keep inflation in check, according to the U.S. consumer price index published on Tuesday.
When factoring in inflation, the price of gas is about where it was at this point in 2017, De Haan noted.
More affordable gas may be putting pressure on sales of electric vehicles. Ford said this week that it’s cutting 2024 production of its electric F-150 Lightning pickup in half.
De Haan said he believes prices could drop below the symbolic $3 threshold by Christmas.
In Britain, where gasoline is called petrol, prices have fallen to lowest level at the pumps on average for more than two years, the Royal Automobile Club has said.
A liter of unleaded costs about £1.43 on average, a price which was last seen at U.K. forecourts in October 2021.
A fall in wholesale fuel costs resulted in lower pump prices, according to the RAC, and petrol could fall below £1.40 in the next week.
The drop also comes after the UK competition watchdog warned that drivers were not getting a fair deal, according to the BBC.
The U.K. Competition and Markets Authority (CMA) said last month that retail prices for petrol and diesel had not fallen in step with wholesale costs, adding that there was “cause for concern” competition in the fuel market was not working.
The cost of filling up began rising as demand increased when coronavirus pandemic lockdowns were eased, and jumped further after Russia invaded Ukraine last year. Fears over oil global supplies saw the price of a barrel of Brent crude oil hit more than $120 in June 2022.
In recent months, concern over fuel prices returned as petrol rose for four months in a row as crude oil prices increased again after major oil producers, such as Saudi Arabia and Russia, decided to restrict production.
Pump prices in the U.K. peaked in July at a record £1.92p a liter for petrol and £1.99 for diesel.