Plan that roadtrip, America. Gas prices are at historic lows and will keep declining.
The average national gas price is $2.26 per gallon — 28 percent below what the price was a year ago — according to a report by the American Automobile Association (AAA). Analysts expect the average gas price to drop below $2.00 per gallon by the end of the year. Gasoline future prices hit 6-year lows Monday.
Changes of just a few cents per gallon can have huge impacts on the economy. U.S. consumers spent $370 billion on gasoline in 2014, meaning a 28 percent price drop is equivalent to a $102 billion tax cut. American households are expected to save $700 at the pump this year, according to analysis by the Energy Information Administration (EIA).
Low gas prices are the result of plummeting crude oil prices. Crude prices have fallen more than 60 percent since last summer due to surging oil production and weak demand. Much of the increase in oil production came from the U.S. thanks to hydraulic fracturing and horizontal drilling. American oil production increased 75 percent in the last seven years.
Low prices at the pump are enormously beneficial to American households who can now use money not spent on gasoline to save more, pay down debt, or buy other goods. Cheap gas also helps poor families who are more vulnerable to energy price increases.
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