Why Gas Prices Are Low This Labor Day Weekend

Americans behind the wheel may get some relief in their wallet this weekend, as Labor Day gas prices are forecasted to reach the lowest holiday levels since 2010, according to a study by GasBuddy.

The price drop is part of a decrease that began in July and will likely continue through the autumn, according to the gas price tracking company.

The average national gas price is $3.45 for a gallon of regular, according to the Energy Department's Energy Information Administration's weekly report released on Monday. That price is about two cents cheaper from last week, and nearly 10 cents cheaper from a year ago.

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Regions that source gasoline from the U.S. Gulf Coast, which GasBuddy says accounts for more than 51 percent of American refinery capacity, will likely see the cheapest gas prices.

However, there are some areas that will still have to pay average or higher prices. States around the Great Lakes may get the short end of the stick due to price adjustments at their regional refineries.

Geopolitical tensions such as violence in the Middle East and uncertainty about long-term Russian energy supplies have not altered the oil supply yet, according to GasBuddy analyst Patrick DeHaan.

It helps that refineries have operated with few problems this summer and rising domestic oil production is putting downward pressure on oil and thus gasoline prices, he said.

The lack of major hurricanes, which generally propel oil prices higher, is another factor he said.

"The good news for motorists doesn't end there: the conclusion of Labor Day weekend also brings summer driving season to a close, and demand drops off, easing prices," DeHaan said.

Much of the U.S. also will switch back to winter gasoline in mid-September, which should also put downward pressure on pump prices as winter gasoline is cheaper to produce, he said.

Parts of the country may already notice isolated instances of prices as low as $2.99 a gallon, he said, such as Tennessee, South Carolina, Alabama and Mississippi.

DeHaan predicts that the national average this fall will drop to around $3.30 to $3.39 a gallon, with a small chance of even $3.20 a gallon, meaning some states will see averages under $2.99 a gallon.