Gas prices could soon hit the $3 mark for the first time in four years, thanks to a surge in global oil supply driving crude prices lower, according to a new AAA analysis.
The national average for a gallon of gas fell to $3.05 last week, fueled by declining crude oil prices, lower demand, and the seasonal switch to cheaper winter-blend gasoline. The last time drivers saw $3 gas was back in May 2021.
As of Tuesday, West Texas Intermediate (WTI) crude futures were trading around $57 per barrel — a steep drop that’s giving relief to consumers. Crude oil currently makes up 51% of the cost of gasoline, according to the Energy Information Administration (EIA).
AAA’s outlook mirrors EIA projections that expect the average retail price for regular gas to hover around $3.10 through the end of 2025 and drop to roughly $2.90 by 2026.
Andy Lipow, president of Lipow Oil Associates, said the current dip reflects basic market forces. “Gasoline prices are tracking crude oil prices lower,” he told FOX Business.
Lipow noted that OPEC+ has been steadily restoring production cuts, adding to the global supply, while U.S. oil output has hit record highs of over 13.6 million barrels a day. New supply from Brazil, Guyana, and Argentina is also flooding the market. “The result is a glut,” Lipow said.
He pointed to EIA data showing global oil supply expected to rise by 3 million barrels per day in 2025, while demand increases by only 700,000 barrels. “Oil prices have fallen dramatically over the last few weeks as the market sees a growing surplus accumulating on floating storage — tankers loaded with oil with nowhere to go,” Lipow added. He also said China has been taking advantage of low prices to fill its strategic reserves.
Lipow predicts the national average will hit $3 per gallon within the next week.
Phil Flynn, senior analyst at Price Futures Group and FOX Business contributor, credited President Donald Trump’s diplomatic ties with OPEC for encouraging member countries to boost production faster than expected. He also said easing tensions in the Middle East are helping stabilize markets, since uncertainty in the region often drives prices up.