Labor Day weekend travelers can look forward to lower gas prices at the pump as GasBuddy is projecting the national average price of gas on Labor Day to be $3.27 a gallon – the cheapest for the holiday since 2021. This represents a decline of 50 cents, or 13%, from Labor Day last year, and 52 cents from Labor Day 2022. During the holiday weekend, Americans are expected to spend about $750 million less on gas than they did last year, according to GasBuddy. This drop in prices is a welcome change, as drivers in some US states are enjoying an even bigger decrease in prices at the pump.
Gas prices have dropped the most over the past year in states like Oregon (97 cents), Washington state (93 cents), Arizona (88 cents), Alaska (87 cents), and Utah (68 cents), according to AAA. The current price is significantly lower than the $5-a-gallon gas that Americans faced earlier in the year, following Russia’s invasion of Ukraine. However, Labor Day gas prices were cheaper in previous years, such as in 2020 when US gas prices averaged $2.22 a gallon. The drop in gas prices can be attributed to various factors, including weaker oil prices, softer demand for gasoline, and stronger refinery activity leading to more gasoline supply in the US.
One of the key factors contributing to the drop in gas prices is the absence of major disruptions to US oil production and refineries caused by hurricanes so far this year. Additionally, US oil production has reached all-time highs, offsetting the loss of oil from OPEC and its allies. Despite recent supply outages in OPEC nations like Libya, oil prices have not spiked as they have in the past. The role of Saudi Arabia-led OPEC remains crucial in the oil market, especially as the group faces decisions on adding significant supply to the market starting October 1.
There is speculation that OPEC may not release the promised supply onto the market, which could impact gas prices in the US. If OPEC does add supply as planned, there is a possibility that the national average gas price could drop below $3 a gallon. This would coincide with the seasonal switch to cheaper winter blend gas, which could further reduce prices at the pump. The overall outlook is positive for consumers as they may benefit from lower energy prices, regardless of the outcome of the upcoming presidential election, as oil prices remain relatively stable compared to previous years.
