How low can gas prices go?
In Southern California — and across the country — prices have been dropping for months, placing extra dollars in consumers' wallets. This week the average price for a gallon of regular hit $3.24 in Los Angeles and Long Beach, the lowest in four years, according to AAA. In Orange County, it was $3.19.
Energy analysts say it may go lower.
"We could see gasoline prices in the high 2s," said Amy Myers Jaffe, executive director of energy and sustainability at UC Davis.
Several factors are likely to get prices there, Jaffe said.
Oil production in the United States — driven by the nation's shale oil boom — is increasing. And on the demand side, the sluggish global economy has sent the price of crude steadily down.
In the U.S., where growth has been stronger, demographics and consumer habits are putting downward pressure on demand, analysts said. As baby boomers age, they're driving less, while millennials haven't shown the same affinity for the road as previous generations, said Brian L. Milne, energy editor at Schneider Electric.
When Americans do drive, they're zipping around in more fuel-efficient vehicles.
"That has been the biggest factor in reducing gasoline demand," Milne said. "We are producing more gasoline than we need."
Tom Kloza, oil analyst for the Oil Price Information Service, agrees prices will drop. But there will be temporary increases along the way, he said.
The current decline is partly seasonal: Fewer people drive in the fall, and California recently switched to a cheaper winter blend of gasoline. And on Jan. 1, motor vehicle fuels will be included in the state's cap-and-trade program, which lets polluters buy and sell rights to emit greenhouse gases. That could put upward pressure on gas prices, Kloza said.
But the nation's shale oil boom should help drive down prices in 2015 across the state, with average prices potentially falling below $3 once next year's summer driving season ends, Kloza said.
"It's going to be a sloppy year next year for oil," he said. "On balance, crude oil prices should be the lowest they've been in four or five years."
The rise in oil production has been so great that the U.S. Energy Information Administration now predicts average daily production in 2015 will reach the highest level since 1972.
Low fuel prices have been a boon to consumers' pocket books, especially working- and middle-class Americans for whom gas accounts for a significant portion of their paychecks.
When prices were around $4 a gallon, Rita Mena paid as much as $80 to fill her Ford Explorer.
On Friday, at an Arco gas station in Boyle Heights, she shelled out $60.
With the extra money, the 32-year-old said, she can buy more of the things she needs, like groceries or diapers for her 2 1/2-year-old daughter, Leilani.
Then there's the luxuries.
"I want to go out more now," said Mena, who works at a downtown L.A. health clinic. "And maybe I could pick up an extra present or something for Christmas."
The trend of falling prices could still reverse, putting a damper on Americans' spending plans.
If the global economic picture improves or a geopolitical crisis — such as a war between Russia and Ukraine — erupts, gas prices would rise, analysts said.
OPEC could also curtail production. But it's unlikely to cut enough to dramatically affect prices, analysts said.
"The North America shale boom has changed all the calculus," Kloza said.