Gas Prices Drop to Four-Year Lows Amid Holiday Travel Surge

• Gas prices have dropped 7% from last month and plummeted 43% from mid-2022 peaks near $5 per gallon
• Regional price disparities remain significant, with Hawaii and California above $4 while Oklahoma averages $2.30 per gallon
• Over 40% of Americans plan to spend less this holiday season due to high goods costs, making lower gas prices especially timely

Gas Prices Hit Four-Year Lows During Holiday Travel Season

U.S. gasoline prices have dropped to their lowest levels since 2021, with the national average for unleaded fuel remaining below $3 per gallon for most of December, according to AAA. This marks the cheapest holiday season gas prices since the pandemic year of 2020.

Current fuel prices have declined approximately 7% from last month and plummeted roughly 43% from mid-2022 peaks of nearly $5 per gallon, which occurred during the post-pandemic inflation surge.

The price relief comes as AAA forecasts record holiday travel, with over 122 million Americans expected to travel between December 20 and January 1. Nearly 110 million travelers (approximately 90%) are projected to drive to their destinations.

Lower gas prices may help offset broader holiday spending pressures. CNBC polling reveals that over 40% of respondents plan to reduce holiday spending this year—a 6-point increase from 2023. Among those cutting back, 46% cite high goods prices as the primary reason.

Regional price disparities remain significant. Hawaii and California continue to see averages above $4 per gallon, while Oklahoma reports prices just below $2.30 per gallon.

Market Implications: The substantial decline in fuel costs could provide consumer spending relief during the critical holiday retail season, potentially benefiting retailers and travel-related sectors. Lower transportation costs may also ease inflationary pressures across supply chains. Energy sector companies, particularly refiners and gas station operators, may face margin pressure from reduced prices, while airlines and logistics companies could benefit from lower fuel input costs.