The United States easing its tensions with Iran has had the surprising side effect of causing the price of gasoline to drop right before the holiday shopping season. The cost of a gallon of regular gasoline has seen a steady decline throughout the fall that has resulted in prices that are at their lowest levels in three years. Energy experts say that if negotiations between the West and Iran continue to progress, prices could fall further.
In all 50 states, drivers are enjoying lower gas prices than a year ago. According to AAA’s daily fuel gauge report, the average cost of a gallon of gasoline today is around 14 cents lower than the price last month and nearly 25 cents below the same period last year. Tom Kloza, chief oil analyst at GasBuddy.com, said, “The majority of the population will be able to find gasoline for less than $3 a gallon between now and New Year’s.”
At this time of year, seasonal price declines are expected but the price drop has been especially steep this year. The tentative reduction of tensions in the Middle East and swelling supplies of domestic oil are viewed as being responsible for the drop in price. Over the summer, the country saw a spike in oil and gasoline prices after the Egyptian army staged a coup that removed the Egyptian president from power and saw another when the United States appeared ready to take military action in Syria.
Energy experts say that the average household consumes 1,200 gallons of gasoline a year. Every dime shaved off the price of gas translates into a $120 annual savings. Over time, lower gasoline prices act like a tax cut for the households and businesses that reap the benefits.
Consumers in the United States are thankful for their good fortune with gasoline prices as families try to scrape together disposable income for gifts, road trips and entertaining family and friends during the holiday season. Michael Niemira, chief economist for the International Council of Shopping Centers, said, “From a psychology standpoint, lower prices at the pump are correlated with higher consumer confidence. Over the years Walmart has said how deeply dependent their consumers are on gasoline prices and it goes beyond Walmart.”