WASHINGTON -- As oil prices hit a five-year low this week, gasoline prices have settled down to a six-year low, right above the $2-per-gallon mark.
According to AAA, the national average for regular gas fell to $2.01 per gallon on Dec. 14, a price not seen since 2009, during the recession. The national average was 79 cents per gallon (CPG) less than its peak in 2015. It marked a 16-CPG decrease from November and 54-CPG drop from the start of the year.
The continuing erosion of crude prices is the main reason for the collapse in gas prices, AAA reported. West Texas Intermediate crude prices fell to $35.62 per barrel on Dec. 11, a price also last seen during the recession. This marks a 60% drop from June 2014, and the trend is expected to last into 2016 as global supply expands beyond demand.
Twenty-six states already have retail averages below $2 per gallon, with South Carolina, Missouri and Kansas all enjoying the lowest price at $1.79. States with the highest averages include Hawaii ($2.75), California ($2.65), Nevada ($2.49), Washington ($2.42) and Alaska ($2.39).
Averages in 43 states and Washington, D.C., have fallen week over week, with Delaware (down 8 CPG), Minnesota (down 6 CPG) and North Dakota (down 6 CPG) seeing the biggest declines. Seven states actually saw their average rise week over week, with Michigan up the most by 8 CPG, according to AAA.
On a month-over-month basis, the retail average in all states except for Alaska fell more than 5 CPG. Prices fell by double digits in 41 states and D.C., and by 25 CPG or more per gallon in eight states. Wisconsin (down 36 CPG), Minnesota (down 30 CPG) and Michigan (down 30 CPG) enjoyed the biggest monthly discounts.
And year-over-year, average retail gas prices were down the most in Alaska (down 99 CPG) and Hawaii (down 96 CPG). The retail average was off 50 CPG or more in 42 states and D.C., with California seeing the smallest discount at 23 CPG.
Meanwhile, a monthly survey by the National Association of Convenience Stores (NACS) suggests what consumers might do with those gas savings. Lower gas prices could spur last-minute shopping at stores over the holiday season--27% of consumers surveyed said they will increase their spending this December (compared to 24% who said this in Dec. 2014). This percentage is even higher among millennials, with 40% of 18-to-34-year-olds planning to increase spending (vs. 33% in December 2014).
In addition, 39% of millennials said they would drive more in the month of December than in November, compared to 22% of consumers overall.
In this same survey, 32% of consumers expected prices to rise within the next 30 days, which is the lowest percentage expecting an increase since Jan. 2015. This figure is somewhat higher for consumers in the Midwest, where 38% expect higher gas prices next month.
Penn Schoen Berland conducted the online survey of 1,104 gas consumers for NACS between Dec. 8 and Dec. 11, 2015.
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