After being up as much as 25% on a year to date basis in the summer, gasoline prices in the United States have been plummeting and just now actually moved into negative territory on the year. According to AAA (table right), the national average price of a gallon of gas currently sits at $2.24, which is down 0.2% since the start of the year. This makes 2015 only the third year since 2005 where prices declined on a YTD basis as of 10/21. For all years since 2005, prices typically rise an average of 15% (median: +6.6%). Also, at $2.24 per gallon, gas prices haven’t been this low at this time of year since 2006!
The chart below compares the average price of a gallon of gas throughout 2015 to a composite of the average price for all years since 2005. After a weak start to the year, prices in the first half of 2015 followed the historical pattern pretty closely. Ever since the second half began, though, prices began to steadily decline throughout the summer during a period in which they are generally flat. That decline in prices only picked up steam heading into September, bringing prices to where they currently stand now – in the red for the year.
As the chart above illustrates, gas prices are often affected by seasonal factors, so in addition to looking at prices on a year to date basis, it is equally as important to compare prices relative to where they stood at this point a year ago. As shown below, average prices at the pump have declined over 27% from where they were at this time last year, and keep in mind that those prices from last year were down relative to the year before! In fact, the last time average gasoline prices were up on a y/y basis was 469 calendar days ago in July 2014! This represents the longest streak of y/y declines in prices since at least 2005.