Gasoline prices are nearing the $3 threshold as oil prices tumble, demand wanes and cheaper driving fuel blends kick in.
The average price of driving fuel in the United States fell to $3.06 per gallon on Wednesday, $0.05 lower than a week ago, and $0.14 less than last year, according to AAA. This marked the lowest level since January.
“Americans appear to be on the cusp of seeing the national average drop below $3 per gallon and potentially stay there for the first time in years,” said Patrick De Haan, head of petroleum analysis at GasBuddy, earlier this week.
Western states, such as Oregon, Washington, and California, continue to see prices above $4 per gallon due to higher taxes and fees on fuel. But more than twenty states near the Great Lakes area, the Midwest, and the Gulf Coast are seeing averages well below $3 per gallon, with even steeper declines expected.
“We could even see a handful of stations in places like Oklahoma, Texas, or even Wisconsin drop below $2 per gallon in the weeks ahead — something not seen since the pandemic,” wrote DeHaan.
The declines come amid waning demand while refineries have switched to cheaper fuel blends for the slower winter driving season and oil prices hover at their lowest level since May.
West Texas Intermediate (CL=F) recently fell below $60 per barrel as President Trump renewed tariff threats against China, weighing on demand prospects.
Additional supply from the Organization of Petroleum Exporting Countries and its allies (OPEC+), along with progress on a Middle East peace framework, has also fueled concerns about oversupply.
Citi analysts warn that weak “gasoline demand remains a key drag” heading into 2026 and 2027.
“The weakness stems from improving vehicle efficiency, and a growing EV fleet, particularly in the US and China,” said a Citi analyst note on Wednesday.
The Energy Information Administration expects gasoline prices to average $3.10 per gallon this year, down $0.20 from last year.
The agency also anticipates prices to decline further in 2026 to an average of $2.90 per gallon.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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