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A combination of surging oil production volumes from OPEC and the U.S. is putting downward pressure on fuel prices just as seasonally lower gasoline costs are setting in. (Fuel is cheaper to refine in the winter.) At the same time, a record 122.4 million Americans are projected to travel at least 50 miles beginning Dec. 20, including 109.5 million electing to drive, according to AAA.

“We are looking at prices not seen since about March 2021, almost five years ago. That’s certainly great news for motorists,” GasBuddy petroleum analyst Matt McClain told Fortune. “That’s delivering a weekly savings of nearly $400 million [nationwide] compared to just this time last year when prices were 12.3 cents higher per gallon.

“And we are expecting prices to continue falling,” he continued.

The national average price of gasoline for a gallon of regular unleaded dipped 4.5 cents in the last week, now averaging $2.85, according to GasBuddy, after falling below the $3 per gallon threshold in early December for the first time in over four years. The national average is down 22 cents per gallon in just one month.

Barring any major geopolitical disturbances, GasBuddy estimates the average fuel price will fall to $2.79 per gallon by Christmas Day.

“Christmas is often when gas prices settle near the lowest levels of the year, and 2025 is no exception,” added Patrick De Haan, head of petroleum analysis at GasBuddy. “Refinery maintenance has wrapped up, supplies are rising, and winter demand is much lower than in summer—all of which help keep a lid on prices.”

Likewise, the U.S. benchmark for crude oil fell to $55 per barrel on Dec. 16, the lowest since February 2021.

Why is this happening?

The main reasons for these lows are OPEC continuing to ramp up output since April in order to regain more market share, as well as U.S. production hitting new highs above 13.8 million barrels of crude per day. Improved efficiencies and cost reductions are making it worthwhile for now for producers to keep churning out barrels despite weaker revenues.

Likewise, fuel prices seasonally fall in the winter because refiners have completed regularly scheduled maintenance and are producing more fuel supplies. And, notably, winter-grade gasoline is cheaper to produce than summer-grade fuels, also contributing to lower costs. 

Summer-grade gasoline is reformulated and requires more additives to keep the fuel from evaporating as easily during the heat and, therefore, from emitting more pollutants into the air. The extra refining effort and additives make the fuel more expensive.

Diesel and jet fuel prices are on the decline as well, all contributing to combat inflation, but gasoline costs have fallen the most, McClain said.

Fuel prices are expected to stay low through much of 2026 thanks to the ongoing oversupply of global crude oil, according to GasBuddy. A potential peace deal between Russia and Ukraine could cause prices to drop even more if greater Russian oil supplies enter the global market.

There are about 60 gas stations nationwide and rising—concentrated in Missouri, Colorado, Oklahoma, and Texas thus far—that already are selling regular unleaded gasoline below $2 per gallon, McClain said.

As people travel, he cautioned that they plan their fuel stops in advance because crossing state lines often can result in price jumps or drops by as much as 80 cents per gallon.

The number of holiday travelers increased most of this century—peaking in 2019—before tumbling down during the pandemic. But travel has recovered and the 2024 holiday season finally surpassed the 2019 record with 119.7 million travelers, according to AAA. This year is expected to easily surpass that recent record.

“Year-end travel is a mix of family road trips, friend getaways, and tropical vacations” said Stacey Barber, vice president of AAA Travel. “Holiday celebrations look different for everyone, but a common thread is the desire to travel, whether it’s returning to your hometown or exploring new destinations.”