Gas prices, which have been at startling high levels for much of the summer and fall, are finally pulling back—and government forecasts predict they’ll fall as much as 38 cents per gallon by January.
The U.S. Energy Information Administration on Tuesday said it expects the price per gallon to fall from $3.39 in November, the highest price in over seven years and $1.29 per gallon more than the previous year, to $3.01 in January. For 2022, it says, gas prices should average $2.88 per gallon, a notable decline from 2021’s prices.
The price drop comes amid predictions that global oil production will pick up next year, with supply outstripping demand. That hasn’t been the case for the past 18 months, and the slow output caused a squeeze when people began to emerge after months of lockdown from COVID-19.
The Omicron variant, however, remains a wild card. Demand could subside as people put off travel, but there’s also the possibility that it could affect production.
“This is a very complicated environment for the entire energy sector,” said Steve Nalley, acting administrator of the EIA, in a statement. “Our forecasts for petroleum and other energy prices, consumption, and production could change significantly as we learn more about how responses to the Omicron variant could affect oil demand and the broader economy.”
While they’re starting to ebb, gas prices are still sky-high in many parts of the country. AAA reports Californians are paying an average of $4.69 per gallon as of Dec. 8, and Nevada is averaging $3.90. Across the Midwest, though, prices are largely under $3 already and hovering just above that milestone through much of the Southeast.
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