AAA Predicts the Price of Gas Could Go as Low as $2 a Gallon

Little more than a year after U.S. gas prices hit $4.11 a gallon amid forecasts that they would keep climbing, the price at the pump in the Washington region is down to $2.39, and AAA predicts that the decline will continue.

"We may see gas prices dip closer to $2 a gallon," said John B. Townsend II, public and government affairs manager for AAA Mid-Atlantic. "Vehicle miles traveled at this time of year typically fall with the autumn leaves -- people do less driving -- and demand for gas declines."

With supplies up and demand down, the national average for a gallon of regular unleaded gas was slightly higher than in the Washington region, $2.46, down from $3.52 a year ago.

"In the South, we already see some gas stations with gas selling for less than $2 a gallon," Townsend said. AAA reports reflect actual prices from credit card transactions at more than 100,000 gas stations in the United States.

AAA calculated that to fill a 15-gallon tank, the average cost for Washington area drivers would be $35.85, almost $2 below last month's average and far less than the average at this time last year: $53.10.

Given the political volatility of oil prices, if negotiations with Iran over its nuclear ambitions falter, the trend toward lower prices could reverse abruptly. Lower prices are a plus for drivers, but lower demand at the pump means gas tax revenues, which go to state and federal highway funds, also are down.

Fuel taxes provide 25 percent of Virginia's transportation revenue, and the Northern Virginia Transportation Alliance, which promotes growth in the region, pointed out last month that the commonwealth's gas tax has not been increased since 1987. The alliance said the gas tax should have kept pace with inflation over the past 22 years and be 35 cents a gallon, instead of its current 17.5 cents.

The Virginia Department of Transportation has been laying off workers and slashing services in the face of a $2.6 billion revenue shortfall.

The price of crude oil has bounced around the past two weeks, dropping by 8 percent at the end of September before rebounding to settle Monday at $70.41 a barrel on the New York Mercantile Exchange. Analysts attributed the rise in part to a weak dollar.

The weekly report posted by the Energy Information Administration had crude stocks rising by 2.8 million barrels to 338.4 million barrels, far greater than the forecast for a 600,000 barrel increase. The report showed gasoline supplies falling by 1.6 million barrels to 211.5 million barrels.