Gasoline prices have been trending lower as oil prices have fallen and gasoline futures (RB=F) are nearing three-year lows.
The average price of gasoline at the pump on Wednesday hit a six-month low of $3.32 a gallon, about $0.49 less than exactly a year ago, according to AAA data.
“Coinciding with the end of the summer gasoline driving season in the U.S. coupled with a quiet hurricane season so far, oil prices have simply collapsed, and that decline has been driven by weak gasoline,” Andy Lipow, president of Lipow Oil Associates, told Yahoo Finance on Wednesday.
By Wednesday, the average retail price in nine states was below $3 a gallon, with half the country likely to reach those levels by the end of September as much of the country switches to cheaper winter gasoline later this month, Lipow forecasts.
“There is a good chance that the national average retail price of gasoline will reach $3 per gallon by the end of the year,” he added.
Oil prices fell 4% on Tuesday, erasing their gains since the start of the year amid concerns about China’s economy and expected additional supply from OPEC+ this fall. Over the summer, the oil alliance signaled it would roll back some of its voluntary production cuts starting in October.
West Texas Intermediate (CL=F) crude settled below $70 a barrel on Wednesday, while Brent crude (BZ=F), the international benchmark, traded around $73 a barrel.
“Lower prices… may force OPEC+ to rethink its policy, and I wouldn’t be surprised if they changed course and stuck with their current production levels,” Lipow wrote in a note to clients.