America is pumping so much oil that gas could be below $3 by Thanksgiving

New York (CNN) — The oil market is in another tailspin. Producer group OPEC+ is scrambling to stop the bleeding. And gas prices are falling fast, with more to come.

All of this is music to the ears of drivers.

US gas prices fell to a fresh six-month low of $3.31 a gallon on Thursday, down 50 cents from this point last year, according to AAA.

Drivers in 10 US states - including Texas, Kentucky and Kansas - are paying less than $3 a gallon on average. Andy Lipow, president of consulting firm Lipow Oil Associates, expects that another nine states will join the sub-$3 list in the next two weeks.

Data from OPIS, which tracks gas prices at 130,000 stations nationwide, shows that nearly 41,000 of those stations, or nearly one out of every three, are already charging less than $3 a gallon for regular gas. A year ago at this time there were barely 100 stations nationwide that were below the $3 mark.

By around Thanksgiving, approximately 35 to 40 states could be below $3 a gallon, GasBuddy’s Patrick De Haan told CNN on Thursday.

“Gas prices, after two-plus years of sizzling because of outside factors like Covid and Russia, are finally coming back into balance,” said De Haan.

The accelerating drop in gas prices should help ease financial pressure on consumers and contribute to the cooling inflation rate. That in turn could help pave the way for the Federal Reserve to lower interest rates, making it cheaper for Americans to borrow.

This trend, if it continues, could also help Vice President Kamala Harris in the November election as voters weigh which candidate will be best for their wallets. Some economists say gas prices will likely be a deciding factor, and lower prices will favor the current administration.

Gas prices in most battleground states are much lower than a year ago, including sharp declines in Arizona (88 cents), Nevada (55 cents) and Georgia (49 cents).

‘Panic and fear’ at OPEC

Analysts told CNN that this trend of lower gas prices is likely to continue, despite the shift in strategy from OPEC+.

The oil market is so weak that not even a rescue from OPEC+ seemed to help. Pressured over concerns about soft demand in China and record-shattering production in the United States, the producer group, led by Saudi Arabia and Russia, on Thursday scrapped plans to add supply starting October 1.

Oil prices initially rallied on the day, before those gains faded. US crude finished down slightly at $69.15 a barrel – the lowest closing price since December.

“Is some amount of panic and fear setting in?” Lipow said, referring to the mood within OPEC+.

“The market remains in a very bearish mood…We should continue to see downward pressure on pump prices in coming weeks,” said Bob McNally, founder and president of Rapidan Energy Group.

McNally, a former energy adviser to President George W. Bush, said that, despite the timing, he doesn’t think the decision has anything to do with the US political calendar.

“They faced a binary choice between accepting a disorderly price drop and postponing the tapering,” he said.

The two-month postponement announced by OPEC+ on Thursday sets the stage for a decision from the producer group right around the November election about what it will do next.

Of course, the mood in the oil market can change on a dime.

If the violence in the Middle East disrupts oil flows from that crucial region or the Russia-Ukraine war escalates, oil could rebound and derail the slump in gas prices.

Trump promises sub-$2 gas

Former President Trump is promising to make gas prices go much, much lower.

“We’re going to get gasoline below $2 a gallon,” Trump said during a speech on Thursday in New York.

However, some experts are skeptical about that claim – and warn it would likely be bad news were that to happen.

“Easy to boast about – hard to do,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “It’s pure hyperbole to talk about $2-a-gallon gas. Chances are if we see sub-$2 gasoline it will be because of some awful things taking place in the economy.”

Lipow agreed, saying it would take a “significant economic downturn across the world – including in the US” to get demand and oil prices low enough for sub-$2 gas.

Record-setting US production

During his speech on Thursday, Trump vowed to “end Kamala Harris’ anti-energy crusade,” a claim that does not match up with the fact that America is producing more oil now than at any point under his presidency.

US oil output hit an all-time high of 13.4 million barrels per day recently, according to weekly federal data. That is just above the peak of 13.1 million barrels per day under Trump.

Trump also bragged about gas prices tumbling to $1.87 a gallon during his term.

Of course, many Americans could not take advantage of those ultra-low prices in the spring of 2020 because they took place during the height of the Covid-19 pandemic.

“I don’t think anyone wants to return to those pandemic times,” Lipow said.

CNN’s Chris Isidore contributed reporting.

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