Gas prices closing in on $4 as election optimism, cheaper crude push costs down

American drivers are days away from paying less than $4 a gallon for gasoline for the first time since July, according to two prominent energy analysts — a threshold that felt distant when prices peaked above $4.50 in May.

Patrick De Haan, head of petroleum analysis at GasBuddy, put the national average at $4.06 a gallon as of Thursday and said it could fall below $4 'in the next week barring a course change.' Tom Kloza, chief energy adviser for Gulf Oil, gave the same timeline — within 10 days — in an email to CBS News.

Oil prices have been falling in the run-up to the election. My read is because there was optimism that after the midterms these problems would be addressed.— Patrick De Haan, Head of Petroleum Analysis, GasBuddy

The dominant force behind the drop, De Haan told CBS News, is market expectation that the midterm elections would amplify public pressure on the Trump administration to reach a deal ending the conflict with Iran. Oil fell more than 6% on one day alone after Iran's supreme leader signaled openness to talks, according to alupetra.com, with gasoline futures falling 7.53% in the same session.

Several other forces are pulling in the same direction. Oil tanker traffic through the Strait of Hormuz has picked up, easing constraints on global supply. Brent crude, the international benchmark, fell below $100 a barrel on Thursday for the first time since September, trading at $97.44 by midday; West Texas Intermediate was at $90.42. Refinery maintenance season has ended, boosting output, and seasonal demand is softening as summer road-trip traffic fades. Filling stations are already switching to cheaper winter-blend gasoline.

Station profit margins are also unusually wide — and that, Kloza argues, is itself a reason prices must fall further regardless of what happens to crude.

Historically, that is too outsized. A more normal markup would be 40 cents a gallon, and that means that even if futures prices and physical markets hang around present levels, we should see lower pump prices for the foreseeable future.— Tom Kloza, Chief Energy Adviser, Gulf Oil

The current margin per gallon is around 75 cents, according to CBS News — nearly double the historical norm Kloza cited.

The weekly decline has already been steep. GasBuddy's national average dropped 17.1 cents in the single week ending November 2 — what the firm described as the biggest weekly drop in months — to $4.12 a gallon. Colorado led all states with a fall of 32.7 cents that week, followed by Wisconsin, Michigan, and Ohio, according to alupetra.com.

The national picture masks sharp regional divides. The AAA national average for regular gasoline stood at $4.1694 on November 2. California was the most expensive state at $5.9063 a gallon, followed by Hawaii at $5.6566, Nevada at $5.2373, and Washington at $5.1925. North Carolina was the cheapest at $3.3814, followed by Georgia, Texas, and South Carolina — all under $3.70. The gap between California and North Carolina was roughly $2.52 a gallon, according to AAA figures compiled by alupetra.com.

California's premium is structural. Phillips 66 stopped processing crude at its 139,000-barrel-a-day Los Angeles-area plant in October 2025, and Valero planned to end refining at its 145,000-barrel-a-day Benicia facility by the end of April 2026 — together removing about 17.5% of the state's pre-closure crude capacity, according to alupetra.com. California's state taxes and fees on gasoline are the highest in the country at 70.9 cents a gallon, with a state excise tax that rose to 63.4 cents on July 1, on top of the federal 18.4-cent tax that applies everywhere.

A separate regional spike hit the Great Lakes in late October after an operational problem at ExxonMobil's Joliet refinery in Illinois affected a 50,000-barrel-a-day catalytic reformer on October 22. GasBuddy data showed Ohio jumping from $4.05 to $4.34 in a single day and Michigan rising from $4.59 to $4.74. By November 2, both states had pulled back — Ohio to $4.1264 and Michigan to $4.5225 — as the disruption eased.

The Trump administration has deployed several tools to ease prices: expanding access to tax-free red-dyed diesel, opening the door to Russian diesel imports, and waiving the Jones Act — a federal statute requiring goods shipped between U.S. ports to travel on U.S.-built, U.S.-flagged, U.S.-crewed vessels — according to CBS News.

Diesel remains far more expensive than gasoline. GasBuddy put the national diesel average at $6.281 as of November 2, and De Haan predicted it could fall below $6 a gallon by Thanksgiving. California's diesel average was $8.3417, according to AAA data cited by alupetra.com.

The broader 2026 picture shows just how much the Iran conflict reshaped the fuel market. The national average started the year at $2.80 a gallon in the first week of January, peaked at $4.50 the week of May 11 — roughly 54% above the pre-conflict level of $2.96 — and has been declining since, according to EIA data compiled by usgasgauge.com. Averaged across 44 weeks, 2026 is running at $3.87, compared with $3.12 over the same period in 2025.

Looking further ahead, GasBuddy's 2026 full-year outlook — published before the recent decline — projected a yearly national average of $2.97 per gallon, which would be the lowest annual average since 2020 and the fourth straight yearly decline. That forecast assumed the market avoids major new disruptions.

The world has spent years recovering from the economic whiplash of the pandemic and the shock of Russia's invasion of Ukraine, but the situation has been improving quietly since 2022. And 2026 keeps that momentum going. It's not a return to ultra-cheap fuel, but for the first time in a long time, the wind is clearly behind drivers' backs.— Patrick De Haan, Head of Petroleum Analysis, GasBuddy

De Haan has also cautioned that the relief may be temporary. 'Volatility could return quickly after the election,' he warned, with developments around the Strait of Hormuz likely to determine which direction prices move next.

Why it matters — A drop below $4 a gallon would offer the first broad relief at the pump since July for the roughly 290 million licensed drivers in the U.S., though analysts warn that geopolitical developments — particularly around the Strait of Hormuz — could reverse the trend quickly.

Reported by cbsnews.com, alupetra.com, finder.com, techetoday.com, predictionsmarket.com, usgasgauge.com