Gas prices hit lowest level since January as oil slides below $60
Gasoline prices are nearing the $3 threshold as oil prices tumble, demand wanes, and cheaper driving fuel blends kick in.
The average price of driving fuel in the United States fell to $3.06 per gallon on Wednesday, $0.05 lower than a week ago and $0.14 less than last year, according to AAA. This marked the lowest level since January.
“Americans appear to be on the cusp of seeing the national average drop below $3 per gallon and potentially stay there for the first time in years,” said Patrick De Haan, head of petroleum analysis at GasBuddy, earlier this week.
Western states, such as Oregon, Washington, and California, continue to see prices above $4 per gallon due to higher taxes and fees on fuel. But more than 20 states near the Great Lakes area, the Midwest, and the Gulf Coast are seeing averages well below $3 per gallon, with even steeper declines expected.
“We could even see a handful of stations in places like Oklahoma, Texas, or even Wisconsin drop below $2 per gallon in the weeks ahead — something not seen since the pandemic,” wrote DeHaan.
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The declines come amid waning demand while refineries have switched to cheaper fuel blends for the slower winter driving season and oil prices hover at their lowest level since May.
West Texas Intermediate (CL=F) recently fell below $60 per barrel as President Trump renewed tariff threats against China, weighing on demand prospects.
Additional supply from the Organization of Petroleum Exporting Countries and its allies (OPEC+), along with progress on a Middle East peace framework, has also fueled concerns about oversupply.
Citi analysts warn that weak “gasoline demand remains a key drag” heading into 2026 and 2027.
“The weakness stems from improving vehicle efficiency, and a growing EV fleet, particularly in the US and China,” said a Citi analyst note on Wednesday.
The Energy Information Administration expects gasoline prices to average $3.10 per gallon this year, down $0.20 from last year.
The agency also anticipates prices to decline further in 2026 to an average of $2.90 per gallon.
City with lowest petrol prices revealed
Motorists in Perth enjoyed the lowest average price for petrol over the June quarter and prices were lower across the board, the Australian Competition and Consumer Commission has revealed.
The consumer watchdog announced the results in its latest report on the domestic petroleum market, showing average retail petrol prices declined by 6.5c per litre from 182.2c to 175.7c across the country’s five main cities.
Perth scored the lowest average price, with motorists shelling out an average of 171.5c per litre.
Those in Melbourne suffered the largest hit at the pump, forking out 180.1c a litre.
Prices in the Victorian capital only slipped 0.3c over the three months.
Canberra booked the largest drop in price with a fall of 17c to 177.5c.
Motorists in the regions also paid an average of 3.5c a litre more than city dwellers, or an average of 179.2c a litre.
The ACCC credits the fall in average prices to lower global crude oil prices throughout the quarter, and a higher exchange rate between the Australian and US dollar.
It also stressed prices at the pump were heavily influenced by geopolitical factors.
“Crude oil prices were around US$64 per barrel in early June before jumping in mid-June to around US$79 per barrel as the (Israel-Iran) conflict escalated,” the report states.
“Then, towards the end of June, crude oil prices dropped sharply and ended the month at around US$68 per barrel.
“The sharp reduction occurred after tensions eased and oil tanker traffic was not disrupted through the Strait of Hormuz, a key gateway for supply to access global markets.
“Movements in retail petrol prices in Australia are largely determined by international refined petrol prices, which are driven by international crude oil prices and the AUD–USD exchange rate.”
The price of diesel, a fuel source used by industrial customers, also declined 8.5c a litre to hit 178.4c across the five main cities.
Customers in Adelaide enjoyed the lowest price at 176.4c.
Separately, the report also shows EV sales are surging in Australia.
Across the June quarter, 9.3 per cent of all new vehicles sold were battery electric – a 3 per cent jump from the March quarter.
Combined with plug-in hybrid models, EVs accounted for 13.1 per cent of all new vehicles sales over the period.
State governments are rolling out more charging stations to meet the boom, the report noted.
In May, the Tasmanian government announced it would install 11 new public EV charging stations in a $550,000 upgrade.
That same month, NSW announced an additional $16.1m investment to install 246 fast and ultra-fast EV charges across the state.
Oil prices slip lower, consolidating ahead of Fed rate decision
Investing.com — Oil prices slipped lower Wednesday, consolidating after recent strong gains on heightened concerns over disruptions in Russian production, with focus now squarely on the conclusion of a U.S. Federal Reserve policy meeting.
At 06:15 ET (10:15 GMT), Brent oil futures for November fell 0.7% to $68.02 a barrel and West Texas Intermediate crude futures fell 0.7% to $64.09 a barrel.
Oil buoyed by fears of Russian supply disruptions
Crude prices were perched at two-week highs as Russia and Ukraine launched a series of debilitating strikes against each other. Kyiv was seen targeting Moscow’s energy infrastructure, with Reuters reporting that Russian producers may have to cut output due to Ukraine’s attacks.
Russia’s oil pipeline giant Transneft has warned that producers may have to cut output following a slew of Ukrainian drone attacks on major Russian ports and refineries, Reuters reported this week.
Russia is also facing heightened western scrutiny over its long-running war with Ukraine. U.S. President Donald Trump was seen calling for higher trade tariffs against major buyers of Russian crude, chiefly China and India.
Any confirmed disruptions in Russian supplies stand to tighten the outlook for oil markets in the coming quarters, and could offset expectations of a looming supply glut. Fears of oversupplied markets had battered oil prices in August.
“Recent claims by Ukraine that it attacked the Saratov refinery in its latest strike on Russian energy facilities might help create a floor for oil prices at lower levels,” said analysts at ING, in a note.
Oil buoyed by Fed cut expectations
The crude market also received a boost by U.S. industry data showing an outsized, 3.2 million barrel draw in inventories over the week to September 12. The data, from the American Petroleum Institute, usually heralds a similar reading from official inventory data, which is due later on Wednesday.
That said, most eyes are on the conclusion of the latest Fed meeting later in the session, amid growing confidence that the U.S. central bank will cut interest rates later on Wednesday.
The central bank is widely expected to cut interest rates by 25 basis points, with a small portion of traders also holding out for a 50 bps cut.
Expectations of a cut have offered some support to oil markets, given that lower rates tend to boost economic activity and support fuel demand.
But markets still remained largely cautious over just what the Fed will signal on future rate cuts, given that the central bank has repeatedly said that sticky inflation will deter any more monetary easing.
