A Christmas miracle? Gas prices could soon fall to $2.50 a gallon

December 8, 2014, 11:30 PM UTC

Chevron


Like Exxon Mobil, Chevron relied on its refineries to hold up its bottom line in 2012. When oil prices were climbing, integrated energy companies were urged to dump their low-margin refining units. But Chevron and Exxon didn't listen, and when crude prices dropped, the hedge paid off. Profits at Chevron's U.S. downstream operations jumped by a third year over year on increased supply of domestic energy. That wasn't enough to keep overall profits from slipping, however, as big bets on upstream ops, like natural gas exploration, have yet to pay off. --T.Z.
Courtesy: Chevron

Drivers may get a nice Christmas present this year: Even cheaper gasoline.

Average national fuel prices could drop to $2.50 per gallon by Dec. 25, AAA said Monday.

Since the peak price of oil in April at $3.70 per gallon, there’s already been over a $1 per gallon drop. Today, the national average is $2.67, according to the AAA’s Daily Fuel Gauge Report.

That’s the lowest price for oil since Feb. 23, 2010. The report also suggests that the average could dip below 2009 levels in the next few days.

Since just last week, the price of a gallon of gas is down nationally by an average of a nickel, according to AAA.

In New York, gas prices average $3.08 and $2.98 in California, according to AAA. In Florida, drivers pay an average of $2.70 and only $2.44 in Texas and Mississippi.

Prices at the pump are dropping because of a sharp decline in oil prices, in part because of increased production in the United States. Last month, the Organization of Petroleum Exporting Countries’ (OPEC) decided to maintain current production levels despite calls by some member countries to drop it.

For an in-depth explainer on why oil prices have dropped so precipitously over the last few months, check out this recent Fortune article.