You’ve probably seen the headlines talking about how crude oil prices have dropped to their lowest levels since 2004. In addition to that bit of news, we would also point out that the national average price of a gallon of gas dropped below $2 on Sunday to $1.998 per gallon. That’s the lowest level since March 2009.
With this weekend’s decline, prices at the pump are set to post their second annual decline of 10% or more. After compounding those declines, gas prices have lost a third of their value since the start of 2014 and are down by 45% from their 2014 highs. Behind 2008’s decline of 45% through 12/20 and last year’s drop of 27.5%, 2015 is on pace for the third worst annual return in gasoline prices since at least 2005.
The chart below compares the daily change in average gasoline prices in 2015 to the average trend since 2005. Throughout the first half of the year, prices generally tracked their seasonal trend. In fact, in early July, this year’s YTD change was identical to the average YTD change for all years since 2005. From there, though, the bottom fell out and prices declined at a much faster than average rate.
Although prices at the pump are still declining, the pace of decline is slowing. This can be seen in the y/y change in prices shown below. At a decline of 17% y/y, prices have been down on a y/y basis for 530 days, which is the longest streak of y/y declines in at least a decade. As recently as a month ago, though, the y/y change was down 26.4%.