Gas Prices For US Consumers Reach Two-Year Low As Holiday Travel Season Approaches

Gas prices in the U.S. are at their lowest average level since the peak in mid-2022, as record domestic oil production drives down costs for consumers ahead of the holiday travel period.

The national average was $3.12 per gallon for regular unleaded gasoline Wednesday, according to data from AAA.

The U.S. gas prices have not reached this level since June 2021, according to the US Energy Information Administration (EIA). Average prices were $3.25 per gallon one year ago in December 2022 ($0.12 higher than Wednesday's figure), but rebounded in early 2023 amid high inflation and OPEC production cuts.

$3.12 per gallon is nearly $2 less than the weekly peak of $5.11 recorded in June 2022, a 39% decline over an 18-month period.

Average gas prices vary substantially between states, with California posting the highest average price for regular gasoline of the contiguous 48 states—$4.68 per gallon—and Texas posting the lowest average price ($2.59 per gallon).

Hawaii registered an average gas price of $4.73 per gallon Wednesday, 5 cents higher than California's figure.

AAA forecasts that 115.2 million Americans will travel over the holidays by car, bus, train or plane—a 2.2% increase from 2022 but still 400,000 shy of the previous record set in 2019.

Record US Oil Production Driving Down Gas Prices

Crude oil production in the U.S. reached record levels in late 2023, hitting 12.9 million barrels in daily output in September. Oil wells dug during the period of peak prices in 2022 continue to come online, with particularly notable growth in Texas' Permian Basin and federal offshore waters in the Gulf of Mexico.

The US averaged 11.9 million barrels per day of crude oil production in 2022, according to the EIA, and is expected to add at least 500,000 barrels per day in 2024.

Meanwhile, national representatives at COP28 have reportedly agreed to a final stockade agreement that explicitly calls for countries to "transition away" from fossil fuels. The U.S. has vocally advocated for carbon emissions reductions measures at the December UN climate summit, while also receiving criticism from environmental activists for increasing oil output as the world's largest producer.

"We're achieving energy security and reducing inflation by leveraging high-emitting, carbon-intensive oil production...we're going to need to address that conflict," Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University, told The New York Times in early December.

While phasing down US oil output may eventually become inevitable as global climate change initiatives continue to progress, U.S.-based oil companies appear to have no plans to reduce production anytime soon—likely setting back net-zero targets, but providing a near-term boost to inflation-weary holiday travelers (and President Joe Biden's reelection chances).