The average price of a gallon of gas in Chattanooga fell 4 cents a gallon last week and will likely fall again this week with the plunge in oil prices Monday due to the continued global oversupply of oil exacerbated by the prospects of a nuclear deal with Iran and a continued debt crisis in Greece.
Crude oil prices plunged 8 percent Monday, or $4.40 per barrel, to close Monday at $52.53 per barrel in trading on the New York Mercantile Exchange. That was the deepest plunge for crude oil since early February and left oil prices at the lowest level since April.
American drivers who already are paying nearly a buck a gallon less than a year ago to fill up their tanks may have even lower prices to smile about in the future, especially if an Iran nuclear deal is in place by this week's deadline.
The national average gas price could return to nearly $2 a gallon later this year, said Tom Kloza, chief oil analyst at the Oil Price Information Service. The national average is currently sitting at $2.77.
Kloza said all eyes are on Iran, which has the fourth biggest oil reserves in the world. If the West lifts sanctions on Iran, oil exports will increase and could push energy prices down significantly.
"You could have a bunch of crude hitting the market in 2016 - probably when it needs it least," Kloza said.
The national average gas price could return to nearly $2 a gallon later this year, he said. The national average is currently sitting at $2.77.
Gas prices are already averaging 34 cents per gallon less than the U.S. average in Chattanooga, according to GasBuddy's daily survey of 170 local gas outlets. The average price of a gallon of gas in Chattanooga on Sunday was $2.43 per gallon. Chattanooga gas prices were 88.1 cents below what gas prices were a year ago on Sunday, according to GasBuddy.
"From LA to Chicago to New York, motorists saw a promising trend at the pump this past weekend that continue to edge lower today," said Gregg Laskoski, GasBuddy senior petroleum analyst. "That may run counter to consumer expectations but this is what we've seen in recent years when summer prices showed nominal but gradual decline through June and July. Retail gas prices follow the general direction of crude oil most of the time."
While prices are down, oil production by OPEC and Russia are near record high levels even before Iranian oil production could be added to the energy mix.
U.S. light crude oil also continued to decline in response to the Greek vote Sunday rejecting debt bailout terms.
"Uncertainty over Greece is bearish for oil," Olivier Jakob, senior energy analyst at Petromatrix in Switzerland, told Reuters.
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