Several Michigan gas stations are selling gasoline for less than $1 a gallon in Michigan. Some prices are as low as $0.78, according to a Sunday report by a Detroit Fox affiliate.
Such ultra-low prices are likely due to competition between gas stations. The current average cost of gasoline across Michigan is $1.72, while the national average is $1.89 per gallon, according to a report by the American Automobile Association (AAA).
— FOX 11 Los Angeles (@FOXLA) January 18, 2016
Despite the incredibly low prices in Michigan, Missouri has the least expensive gasoline in America with an average cost of only $1.63 per gallon. California remains the most expensive state to buy gasoline, with an average price of $2.77.
Gas prices have plummeted in the last year thanks to an overabundance of oil and natural gas from hydraulic fracking, a well-stimulation technique that has made America the world’s largest oil and gas producer. Oil prices were also driven down by a decision by OPEC last year not to cut oil production in response to low demand and prices. OPEC’s decision, mainly pushed by Saudi Arabia, sent prices spiraling even lower. Oil companies and OPEC members are feeling the pain of lower oil revenues, but U.S. consumers are reaping huge benefits from cheaper gasoline.
Gasoline prices have declined substantially over the last year with the largest price drop occurring in Hawaii. AAA estimates that the average American driver is saving $0.26 per gallon of gasoline relative to this point in 2015.
U.S. consumers spent $370 billion on gasoline in 2014, meaning that recent low gas prices are equivalent to a $102 billion tax cut for the country. American households likely saved $700 to $750 at the pump in 2015 and should save more this year, according to analysis by the Energy Information Administration.
Analysts and academics aren’t entirely sure how Americans are using the money not spent on gasoline. Some analysts believe Americans use the excess to save more or pay down debt. Other analysts claim that the extra money is spent on luxury goods, such as eating out at restaurants. Cheap gasoline disproportionately helps poorer families and other lower-income groups, because fuel costs eat up a larger share of their more limited earnings.
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