The average price of a gallon of gasoline is down nearly 70 cents in Southern California from the previous month, and leisure travelers can thank a volatile global oil market and seasonal shifts in production costs for lower Thanksgiving prices.
The fare shift comes just as 4.5 million Southern Californians will be traveling during the holiday break, the Automobile Club of Southern California announced Tuesday. Analysts are predicting this will break an all-time record for Thanksgiving travel and represent a slight increase from last year.
Around 54.6 million travelers are expected to travel nationwide, with Orlando and Anaheim expected to be the most popular destinations. The top destinations for Southern Californians will include Las Vegas, San Diego, Sedona, the Grand Canyon and Yosemite, the Auto Club predicted.
For the second straight year, Southern California drivers are paying their highest-ever gas prices for this time of year, but prices have been falling for several weeks.
The average price for a gallon of gasoline is $5.43 in California and $5.50 in the Los Angeles-Long Beach area. While this continues the trend of falling gas prices, it’s still well above the average of $4.67 a gallon at that time a year ago, AAA said.
Last month, gas prices in California rose to $6.15 a gallon thanks to a number of factors.
In early October, gas prices rose after shutdowns at several California oil refineries that produce a specific grade of fuel for the state. Due to environmental taxes, higher production costs, and taxes, Californians typically pay about 30 cents more for a gallon of gasoline.
At the global level, major oil producers pledged to cut crude oil production by 2 million barrels a day last month. And last week, gas demand rose while total domestic gasoline inventories fell by nearly a million barrels, according to the US Energy Information Administration.
While all of these factors should point to higher costs at the pump, overall costs have fallen as the oil market has produced more crude and less demand.
Earlier this month, the federal government announced the release of crude oil from the Strategic Petroleum Reserve, increasing supply in the market.
On Friday, China’s health commission announced its tough COVID-19 policy, delaying the reopening of its economy and in turn expected to reduce the country’s demand for oil, Reuters reports.
The cost of crude oil, the main component of gasoline, has also been in a narrow range of $85 to $92 per barrel for several weeks.
“Gasoline prices usually tend to go down this time of year,” said Automobile Club of Southern California spokeswoman Anlleyn Venegas.
Prices are falling because fewer people are taking to the streets when temperatures drop, Venegas said, and refiners have switched to making their cheaper winter blend intended for colder temperatures.
Still, AAA expects this Thanksgiving to be one of the busiest times of year for road trips in years. It is still unclear whether this will boost demand and prices.
“Prices are going down, but we’ll have to see if they stay down until Thanksgiving,” Venegas said.
Other parts of the country enjoy lower prices than California, with gas stations in 13 states selling gas for less than $3 a gallon, according to the AAA.
“More stations may follow, which could be a big help in planning road trips as Thanksgiving approaches,” AAA spokesman Andrew Gross said in a written statement.