Getty Images / Joe Raedle

Here's Why Gas Prices In The U.S. Are So Low

Gas prices are falling sharply, mostly because U.S. production of crude oil has created an oil boom.

By Ben Lawson | December 20, 2014

Consider it an early Christmas present. This week, gas prices are their lowest since 2009.

The average gas price in the U.S. dipped down to $2.43 and there are stations in 24 states selling gas for under $2 per gallon. 

This drop in price is thanks to an oil boom. The high supply has pushed the cost of oil down to about $60 a barrel. Back in June, the price was $115 a barrel. 

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The boom is a response to the high oil prices of 2010; the U.S. stepping up its crude oil production to combat those prices. By last summer, the U.S. became the largest source of crude in the world. 

As this was happening demand for oil began tapering off in European and Asian countries as economies weakened and fuel efficiency increased.

Pretty soon, supply started to surpass demand, and in September, prices began to fall more sharply.

Making things more severe, the Organization of the Petroleum Exporting Countries, which produces a third of the world's oil supply, decided not to cut back on production. That move sent gas prices down even further. (Video via OPEC)

And analysts say the decline has not bottomed out yet. Prices are expected to continue to drop through New Years. 

This video includes images from Getty Images and music from Kevin MacLeod / CC BY 3.0.

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