New York CNN —
The last time it was this cheap to travel by car for Thanksgiving, almost no one was on the roads.
Just in time for the Thanksgiving holiday travel rush, gas prices are tumbling fast.
The national average price of regular gasoline is down by 55 cents a gallon over the past two months to $3.33, according to AAA. This exceeds the typical seasonal drop in gas prices during the fall and leaves the national average at a 10-month low.
If prices stay near current levels, this would be the cheapest gas price on Thanksgiving Day since 2020 when Covid-19 caused many Americans to stay off the roads altogether. That year the national average sat at just $2.12 a gallon — though many people didn’t get to take advantage of it.
A steep selloff in the oil market on Thursday, described by one Wall Street bank as a “bloodbath,” mean gas prices could keep sinking in the coming days.
GasBuddy projects the national average will slide to $3.25 a gallon or lower by Thanksgiving Day, marking the lowest priced Thanksgiving Day for fuel prices in three years.
By comparison, gas prices stood at $3.57 a gallon on last year’s holiday following a year of notoriously high prices. In June 2022, the national average rocketed above $5 a gallon for the first time ever.
Americans to spend $1.2 billion less on gas
All of this is a far cry from Labor Day weekend, when gas prices were near all-time highs for that holiday.
GasBuddy expects Americans will spend $1.2 billion less on gasoline during the week of Thanksgiving compared with last year.
And that’s not because people are driving less. In fact, AAA projects just over 49 million Americans will drive to their destinations this Thanksgiving, up 1.7% from 2022.
All of this is giving momentum to the easing cost of living. After two years of high inflation, consumer price growth is finally moving back towards healthier levels. Even the cost of a Thanksgiving Day meal is finally going down.
Americans are particularly sensitive to swings in gas prices.
“This is pretty significant at a time of the year when a lot of Americans become more attuned to prices ahead of the holidays,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
None of this is to say that inflation broadly or gas prices in particular are low.
Gas prices were much cheaper pre-Covid. The national average for regular gas stood at $2.59 a gallon on Thanksgiving Day in 2019, according to AAA.
Why are pump prices falling now?
Just a few months ago, refinery outages and aggressive OPEC+ supply cuts helped propel oil prices to nearly $100 a barrel.
Since then, concerns about demand, especially in China, have emerged. Oil inventories have also increased.
US oil prices plummeted 5% on Thursday alone, sinking to a four-month low of $73.58 a barrel. Crude rebounded above $74 on Friday but remains down more than 20% since late September.
Analysts at RBC Capital Markets described the nosedive as a “bloodbath” and said that although the selloff is being fueled in part by hedge funds, there are some fundamental reasons behind it. “We can’t ignore that there are increasing signals of physical crude availability on the market at the moment,” RBC said.
In other words, there’s an oversupply problem.
Sub-$3 gas on the way?
Of course, that could change in the blink of an eye in the boom-to-bust oil market.
New moves by Saudi Arabia to slash output or supply disruptions linked to the Israel-Hamas war could cause oil prices to bounce back, lifting pump prices as well.
But for now, gas prices are sinking and that is giving consumers a pre-holidays boost and helping to cool inflation metrics that investors and Federal Reserve officials watch closely.
Drivers in 10 states are even paying less than $3 a gallon for gas and GasBuddy’s De Haan thinks that regional trend just might go national.
“There is a growing reality that we could see sub-$3 gas before the end of the year,” De Haan said.
CNN