Gas prices just reached a new high for 2017. AAA reported that prices at the pump have inched up every day over the course of three weeks, reaching an average of $2.42 per gallon nationally as of Friday. That's up 13¢ from a month ago, and up 31¢ compared to 12 months ago.
Still, in the grand scheme, American gas prices are quite cheap today, as anyone driving during the $3.50+ days of 2013 and 2014 can attest. And prices could very well become even cheaper in the near future.
Consumer gas prices are correlated to the price of wholesale crude oil. For months, the Organization of Petroleum Exporting Countries (OPEC) has agreed to cut production of oil, thereby keeping the supply artificially low and prices genuinely high. Yet as MarketWatch reported on Friday, global crude supplies still remain above the five-year average, partially due to increased output in the U.S. As a result, oil prices—and therefore gas prices—are lower than OPEC might hope.
Now many are speculating that OPEC will soon drop its production caps, which would allow its member to sell more oil yet likely depress prices globally. Right now, oil is selling for over $50 a barrel on global markets. But "if the cartel ends its production cap, prices could quickly collapse, potentially retesting the 2016 low of $26.05" per barrel, CBS News noted. An OPEC meeting is scheduled for the end of May, when the group could make a decision regarding production levels.
The takeaway for driver is that if oil prices are halved, gas prices at the pump will be slashed as well, CBS explained: "For consumers, gasoline pump prices could fall by upwards of 50 percent."