- Sanctions waivers for Iran’s biggest customers have helped drive down global oil prices.
- The plunging price of oil appears to be driving gas prices down as well.
- The average U.S. driver should save about $1 on gas for every 100 miles driven compared with what they would have paid in October.
Oil prices have been in freefall for over a month, with prices on the benchmark Brent Crude tumbling from over $85 a barrel in early October to just over $65 a barrel in recent days. The plunge has been dramatic, most likely driven by an oversupplied market as oil production in the U.S. remains high as the sanctions against Iran have proven less severe than many expected in the early going.
However, is this going to translate into savings for consumers? The good news is that, as 54.3 million Americans prepare to travel in some way over 50 miles during the Thanksgiving weekend, the decline has been sustained enough to help drive down gasoline prices just in time for some holiday road trips.
Falling Gas Prices and Your Savings
The economic levers that bring crude oil from underground to your gas tank can be complex, with many different steps. So a drop in oil prices won’t always translate to lower gas prices, depending on factors like refinery capacity. However, the current drop in oil prices would appear to have made its way to consumers at the pump.
The average gas price in the U.S. sits at $2.61 a gallon, per AAA, which is a full 8.5 percent below the $2.86 a gallon it was at a month ago. Granted, that’s a smaller drop than the plunge in crude oil — losses for crude oil are in excess of 25 percent — but it could still translate to some significant savings for drivers taking advantage of the time off.
Based on the average gas mileage of 24.7 mpg for American cars, the 48.5 million Americans who will be driving over the weekend should save about $1 for every 100 miles of travel when you compare current costs to October’s high.
Iran Sanctions, High Supply Stymie Oil Producers
The current atmosphere of low oil prices appears to have a lot to do with the decision by President Donald Trump’s administration to grant waivers to some of Iran’s biggest customers — such as Japan, Italy, India and China. As major producers like the U.S., Russia and Saudi Arabia pump record amounts of crude oil, the anticipated reduction to global supply that comes from removing Iranian crude from the market hasn’t materialized as expected and led to a supply glut.
Things could change when the Organization of the Petroleum Exporting Countries meets on Dec. 6 and the organization has a chance to agree on production cuts. So if you’re planning on driving this weekend, you could be striking while the iron is hot with regard to low gas prices.
Click through to read more about how much money traffic costs you and the U.S.
More on the Holidays
- More People Than Ever Will Do Their Black Friday Shopping Online — Here’s Why
- These Are the 93 Stores Open on Thanksgiving and Black Friday
- Save Hundreds With Target’s Black Friday Deals
- Watch: How to Travel Solo on a Budget
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