AAA: Labor Day gas prices to be lowest since 2004

Say goodbye to summer and to higher gas prices.

The AAA on Monday reported that gas prices continue to plummet and that most drivers nationwide will pay the lowest prices at the pump over the Labor Day weekend since 2004.

The national average price for regular unleaded was $2.47 per gallon, down 12 cents from last week and 18 cents from a month ago, AAA reported. Less than a year ago, motorists were paying nearly a dollar more a gallon for gasoline, the agency said.

The drop in gas prices comes as oil prices marked their biggest three-day gain in about 25 years, jumping to $49.20 a barrel. Oil surged on reports that OPEC is talking about possibly cutting production, and the U.S. government reduced estimates on domestic production.

Michael Green, a spokesman for AAA in Washington, D.C., said the national average for gas on Labor Day in 2004 was $1.85. While prices this year “aren’t going anywhere close to that,” he said there are indications the price could drop more despite the sudden increase in oil.

“Crude oil is the biggest cost associated with gas, and it is a mystery as to where it will go for the rest of the year,” Green said. “Nothing is certain in crude oil prices at the moment.”

The drop in gas prices comes despite outages at refineries in the Midwest and East Coast. Across the nation, 45 states showed prices down by at least a nickel a gallon with 16 states enjoying a double-digit drop. Michigan led all states, with prices down 31 cents.

AAA Texas reported Tuesday that Lone Star motorist will see the lowest prices on the holiday weekend in 11 years. The agency said consumers are paying a statewide average of $2.23 a gallon, down 8 cents from last week and 15 cents in two weeks. Green said about 5 percent of gas stations in Texas were selling for less than $2 a gallon. In Tarrant County, more and more stations are selling gas for less than $2.

Analysts have been predicting that pump prices will shrink even more after Labor Day. Prices typically don’t decline until then because demand historically drops off. Beginning in September, refineries also switch to a cheaper blend of gasoline.

But in this volatile market, Will Speer, a senior petroleum analyst with GasBuddy.com, said all bets are off. While he is comfortable saying that gas prices nationally drop will to $2 or less by Thanksgiving — and to that level in Texas by late October — that is as far as he will go.

“If oil had not been so volatile in the last week, I’d say that we might start to see them tick up. But no one knows what is going on with oil,” said Speer, who works in Houston. “Retailers aren’t looking to slash prices or raise them too fast until we see where we are heading.”

This story was originally published August 31, 2015 at 2:48 PM with the headline "AAA: Labor Day gas prices to be lowest since 2004."