Gas Prices Going Down: National Average Dips Below $4

For the first time since early August, the big number on the national gas map starts with a 3. Barely. GasBuddy's Patrick De Haan posted Sunday morning that the U.S. average had slipped to $3.998 a gallon "and falling," with diesel headed the same way.

That's a fraction of a cent, and AAA's own count was still a hair above $4. But the direction is what drivers care about, and it has been pointing down for two straight weeks.

Gas prices are going down: where the national average stands

AAA's daily survey, built from up to 130,000 stations, had regular unleaded at $4.020 on Sunday, Nov. 8. That's down from $4.037 on Saturday, $4.173 a week earlier and $4.361 a month ago.

GasBuddy's figure runs a little lower because it draws on a different pool of price reports. Its reading crossed the $4 line days earlier than expected. De Haan had said only late last week that the average could fall below $4 sometime this coming week.

None of this means gas is cheap. A year ago AAA's average was $3.07. And AAA pointed out in its Nov. 5 update that before this year, the national average had never been above $4 at any point in November.

Why gas prices are dropping now

The short answer is oil, plus the calendar.

Crude had climbed to a six-month high at the end of October. Then the midterms happened. After Democrats won both chambers of Congress, traders bet that lawmakers would press the White House to wind down the conflict with Iran, which began in late February and has disrupted Middle East oil shipments for months. Brent crude, the global benchmark, fell about 17% last week. Reuters data cited by The Hindu shows that was the steepest weekly drop since the start of the pandemic in 2020 and the biggest ever in dollar terms.

The slide continued when futures reopened Sunday evening in New York. Brent was down 84 cents at $97.48 a barrel in early Asian trading, and U.S. crude was near $90.50. The trigger was a phone interview Trump gave CNN on Sunday. Asked whether he would order more strikes on Iran, he said it depends on whether Tehran signs "a very strong agreement," adding that it was "highly unlikely" to be necessary.

The seasonal part matters just as much. Demand usually fades after summer, and stations switch to winter-blend gasoline, which is cheaper to make. De Haan said in a follow-up post that the decline was mostly seasonal, with oil's drop on Iran deal hopes adding to it.

Other supply news this weekend

Iraq's foreign minister, Fuad Hussein, said Sunday that Baghdad had reached an understanding with the U.S. to ship Iraqi oil through the Strait of Hormuz using a lane near Oman. He put Iraq's losses from the war and export disruptions at $60 billion.

JPMorgan also said in a Friday report that the world is heading back toward an oil glut, estimating supply ran 1.1 million barrels a day above demand in September and 1.4 million in October.

Will gas prices keep going down?

Probably for now, with one large caveat.

Pump prices tend to follow crude with a lag, so last week's oil plunge hasn't fully reached station signs yet. U.S. crude settled at $88.12 on Wednesday, Nov. 4, after a $7.97 one-day drop, AAA noted. If oil holds near current levels, more stations should drift under $4.

The caveat is that the conflict isn't over. Secretary of State Marco Rubio called Iran's current demands unacceptable, according to Bloomberg reporting cited by CNBC TV18. Over the weekend, a tanker leaving the Strait of Hormuz was hit by an unknown projectile, and Yemen's Houthi rebels fired missiles at Riyadh that caused minor damage to Saudi Aramco offices. Trump also announced a new operation, which he called Task Force Iron Gate, to choke off Iran's weapons and sanctioned trade over land and the Caspian Sea, Investing.com reported.

One analyst quoted by Reuters, Tim Waterer of KCM Trade, put it this way: the market is still waiting to see whether the midterms produced a lasting change in Trump's approach or just a temporary change in tone. GasBuddy made a similar point when prices first started tumbling, titling its Nov. 2 report a drop that "may not last."

For context on how the conflict has moved markets before, our report on the U.S. strikes on Iran's Qeshm Island covers the Nov. 2 flare-up, when Iran's Revolutionary Guard fired at a U.S. aircraft.

Cheapest and most expensive states for gas

Where you live still decides most of what you pay. In GasBuddy's Nov. 2 weekly survey, the cheapest averages were:

• North Carolina, $3.37
• Georgia, $3.54
• Texas, $3.58

The West Coast sat at the other end. California averaged $5.85, Hawaii $5.64 and Washington $5.14. AAA's Nov. 5 list of the priciest markets also included Nevada, Oregon, Alaska and Illinois. GasBuddy's median price, $3.99 on Nov. 2, was already lower than the average, because a few very expensive states pull the mean up.

Diesel is the sore spot. At $6.19, it is about $2.46 more than a year ago, according to AAA, and that cost shows up in freight, farm and delivery bills. De Haan expects it to fall below $6 soon.

What drivers can actually do

Prices are falling unevenly, so the gap between stations a mile apart can be wide right now. Price-check apps and AAA's state map are worth a look before filling up, especially on the West Coast. Topping off the tank in a falling market has little upside, so waiting a few days, when you can, is reasonable.

The bigger question is the one oil traders are asking about Iran talks. If they hold together, this could be the start of a long slide toward last year's prices. If they don't, the sub-$4 national average may turn out to be a short visit. The Federal Reserve is watching too. Its October decision, covered in our piece on what the Fed's rate hold means for your money, came while oil was near its six-month high.