Oliver James Montgomery-Gas prices fall under 3 bucks a gallon at majority of U.S. stations

Gas prices down this holiday season

Cheaper gasoline prices may help folks recover from any spending binges over the holidays.

"There's a window of opportunity over the next six weeks" for the national average to dip below three bucks a gallon, which last occurred in May of 2021, GasBuddy.com analyst Patrick De Haan said Tuesday, noting that a nickel drop is all that's needed. 

In fact, that dip has already happened across much of the country, with the exception of states including Hawaii, California, Washington, where average pump prices are topping four bucks a gallon, according to a tally updated daily by AAA.

Gas prices have spent the last 10 days bouncing around within a two-cent range, currently averaging at $3.10 a gallon nationwide. But the median average is $2.79, as the national number is heavily influenced by higher prices on the West Coast, according to Triple-A spokesperson Andrew Gross. 

"At about 80,000 of the 120,000 gas stations around the country, give or take, gas is selling right now below $3 a gallon," Gross told CBS MoneyWatch.

Seasonal factors include relatively weak demand for gas during the post-holiday travel season, De Haan and Gross said. The yearly trend of lower gas prices typically ends in mid to late February as refineries start maintenance and switch to cleaner, costlier blends. 

Barring external events, or "wild cards" as De Haan put it, gasoline prices are likely to bottom out this month or next, then start to climb six weeks or so later, rising 35 cents to 85 cents and bringing the national average to the upper $3.00 range by Memorial Day, he said.

Red Sea impact

The oil market on Tuesday was only briefly roiled by rising tensions in the Red Sea, among the world's busiest trade routes.

Oil prices jumped before relinquishing gains amid developments that had Danish shipping giant Maersk on Tuesday pausing shipping through the Red Sea and Gulf of Aden until further notice, after militants attacked one of its vessels. The decision furthered a 48-hour pause put in place on Sunday in the immediate aftermath of the weekend assault.

Houthi rebels in Yemen for weeks have launched drone and rocket attacks targeting ships in the Red Sea and the Bab al-Mandab Strait, a strategic passage connecting the Red and Arabian seas. 

The high seas attacks are not blocking oil or other shipments, but are adding time to get to their destinations. 

"It doesn't mean it's not going to get out, but instead of going south they have to go north through the Suez Canal, so you can probably tack on two weeks to whatever they are shipping," said Gross. 

The events are a reminder that potential dangers to energy flows posed by the current Mideast crisis extend beyond the Strait of Hormuz, but it does not represent a major risk to oil and gas flows," wrote Eurasia Group analysts in a report in late November.

One would have to go back to the Russian invasion of Ukraine to see a global event disrupt oil prices to the point where it was impacting gas prices quickly, within 10 days or so, Gross said. "That war is grinding on and along with the war in the Middle East, yet oil prices are struggling to stay above $70 a barrel."

After topping $79 a barrel, global benchmark Brent crude lately fell 50 cents, or 0.7%, to $76.54 a barrel. U.S. crude gave up 67 cents, or 1%, to trade at $70.96 a barrel.

Even threatened production cuts by OPEC have done little to bolster oil prices. "It's too soon to say OPEC's clout is diminished, but they are not the only game in town," said Gross, who noted that the United States is currently pumping more oil than ever before, to the point that U.S. companies are exporting crude as well as gasoline. 

Movement in the oil market takes time to impact what consumers pay for gas, particularly as each individual station sets its own prices. "That's why it costs more near the airport — there's no national office of gasoline prices," Gross said. 

On a related note, diesel prices have fallen below four bucks a gallon, the lowest since the summer, in a trend that bodes well for the broader economy as it lowers the costs of shipping most things, both Gross and De Haan noted.

Kate Gibson

Kate Gibson is a reporter for CBS MoneyWatch in New York.