Gas Prices Fall To $3.50 As Economic Stall Slams Crude-Oil Costs

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Remember $4 gasoline?

It was just last May that gasoline soared to an average price of $4 per gallon across all U.S. markets, with even the cheapest pumps showing prices of $3.50 or more.

What a difference a few months makes.

Gasoline has now fallen below $3 a gallon in a handful of areas, including parts of Texas, Missouri, and Michigan.

And the median gas price among all 50 states--it varies considerably, depending on what state you live in--works out to $3.53 as of this morning.

INFOGRAPHIC: What's Behind The Gas Prices You Pay At The Pump?

The decline in fuel costs is due to plummeting crude-oil prices, resulting from concerns over the potential for another recession in the U.S. and European economies. Oil has fallen below $80 a barrel, dropping 9 percent last week alone.

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gas Prices

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That's a 30-percent decline over the peak cost of $113.93 in late April, and its impact hasn't fully rippled through the retail gas prices drivers see on their local pumps. Some analysts say average gas prices could fall another quarter, to $3.25 per gallon, by Thanksgiving.

But don't get too complacent. The Associated Press quoted a projection from investment bank Goldman Sachs that oil could rise back to $120 a barrel within six months, seesawing gasoline prices right back up to that $4/gallon average.

Some data seems to indicate that consumers are more likely to buy a car with higher gas mileage not based on gas prices, but on the frequency and velocity of price changes.

In other words, the more prices seesaw--even if they drop as they've done lately--the warier it makes car buyers, and the more likely they are to protect themselves by choosing a car with better fuel efficiency.

For those of you who yearn for the days of $4 gasoline, rest assured it can still be found in one state: Hawaii, where all gasoline has to be shipped into the state's islands from refineries elsewhere.

In the Aloha State, the average price of a gallon of gasoline is roughly $4.25. That's more than a dollar higher than South Carolina, which has the cheapest state average gas price this week.

The priciest gas in the 48 continental U.S. states is in California, where fuel costs are still just a hair under the $4/gallon mark.


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Comments (5)
  1. Would it be rude of me to suggest that now would be a good time for a 10 cent/gallon increase in federal gas tax?

  2. Until our roads contain over 50% electric vehicles, it would be very rude of you to suggest any hike in gas tax...or tax hikes of any kind except on billion dollar profit oil companies. If you want to increase tax on gas, then encourage these automakers to start mass producing electric vehicles so a gas tax hike won't plunge us back into Bush's recession.

  3. James they are mass producing them,maybe not in the numbers you mention but the problem for most is they are still too expensive which will delay widespread adoption.

  4. your insight is incorrect. they certainly are not mass producing them. more like trickle production at this point.

    and yes, they are still too expensive for widespread adoption. however, price is not the main problem that is preventing widespread adoption.

    i have said this a million times already - they are only gonna give us whatever they need to sell the cars at hand.

    at this point, there are still waiting lines. so no need to cut the price or up the range on this year's evs.

    the price will drop and the range will increase just enough to bring the next new group of buyers in.

    for the most part, decreasing the price will bring in a lot more buyers than increasing the range will do.

    we all can view the proverbial snowball.

  5. So, can we fix the economy by dropping the 19 cent/gallon fed gas tax?

    Or is a small increase or decrease in gas tax only going to slightly adjust consumer behavior?

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