Gas hasn’t been this cheap on Labor Day since 2020
Americans soaking up the end of summer this holiday weekend will catch a break at the gas pump.
Labor Day gas prices are expected to average $3.15 per gallon this year— the cheapest since 2020 during the COVID-19 pandemic, according to GasBuddy. That’s down modestly from $3.29 last Labor Day.
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Drivers in some parts of the country will find sub-$3 gas. As of Thursday, the average price is below $3 per gallon in 15 states, including Georgia, Texas, North Carolina and Iowa, the automotive and trip-planning group.
The relatively low fuel costs offer a bright spot to consumers still struggling with a higher cost of living at the grocery store, in their utility bills and elsewhere. Although gas prices have edged higher in recent days, they remain well below last summer — and it’s largely due to the fact that oil prices remain low.
"Americans are spending less and less of their paychecks filling up their tanks," Patrick De Haan, vice president of petroleum analysis at GasBuddy, told CNN in a phone interview.
Gas prices crashed in 2020 as the health crisis caused many Americans to stay off the roads. The national average that Labor Day plunged to just $2.22 a gallon.
Then gas prices reached a Labor Day record high of $3.79 in 2022, the same year gas surged to $5 a gallon for the first time after Russia’s invasion of Ukraine spiked oil prices.
"Lowering the cost of energy is very important. It translates to an immediate increase in household cash flow and helps middle- and lower-income Americans who are often living paycheck to paycheck," Joe LaVorgna, counselor to the U.S. treasury secretary, told CNN in a phone interview.
U.S. oil fell below $64 a barrel on Thursday, down from $77.38 a barrel on President Joe Biden’s final full day in office.
The White House took a victory lap for the lower fuel costs, crediting Trump with "fully unleashing American energy dominance" in a statement on Thursday. LaVorgna said oil prices are "largely a result of the president’s policies" and his efforts to get U.S. "allies and partners overseas" to pump more oil.
Although it’s true that U.S. oil production remains near all-time highs, output is little changed since Trump took office, promising to slash red tape and end President Joe Biden’s alleged war on energy.
In fact, U.S. oil output stood at 13.4 million barrels per day during the week ending on Aug. 22, down slightly from 13.5 million during President Joe Biden’s last full week in office, according to .
Still, LaVorgna argued the oil industry is feeling better about investing in future production because of Trump’s deregulatory stance.
"Oil companies are more confident in the outlook — and that they won’t be regulated out of existence," he said.
Analysts, on the other hand, have linked low gas prices to the willingness of Saudi Arabia-led OPEC to ramp up production.
After years of holding back supply, OPEC has — something during a major speech at Davos in January, just days after taking office. OPEC has been accelerating its output to regain market share.
"In terms of keeping prices contained, OPEC’s aggressive return of barrels has arguably been the most unexpected factor," said Rebecca Babin, senior energy trader at wealth management company CIBC Private Wealth.
Babin said she’s "confident" U.S. oil prices will remain below $70 over the next few months, though she said the "wildcard" would be a sanctions crackdown on Russia or Iran that could lift crude prices.
GasBuddy’s De Haan is also hopeful that tame gas prices are here to stay. The national average of $3.21 per gallon is up 7 cents from a week ago, according to AAA — but De Haan blamed that on severe weather in the Midwest that knocked offline a critical Indiana refinery.
"The timing is up in the air and depends on hurricane season, but the stars look aligned for sub-$3 gas this fall," De Haan said. "It’s a question of when, not if."
