Gas Prices Expected to Drop to $2 and Below

Since 1995, Iran has not been able to sell oil to the U.S. Most major western countries imposed sanctions within the last five years aimed at curbing Iran’s nuclear program. Instead it’s been selling to China, India, Turkey and other developing markets.  

Many states in the U.S have already been experiencing quite a change. Some spots in Central Indiana have dropped to cheaper than $2. In Tallahassee Fla, you can find gas as low as $2.28.

Jordan Saidi, a worker at a local phone company in Tallahassee, whose father owned a gas station nearby, predicted the change in prices for the upcoming year.

“My dad used to own a gas station up here, and was making a good amount of money. He often says how he wishes he could have kept his business. He predicted that gas prices were going to drop significant by 2015-2016,” said Saidi.

Tom Kloza, chief oil analyst with the Oil Price Information Service says that we can expect a decline in gas prices sooner than later.

"Once we get past Labor Day, we should see gas falling by 10 to 15 cents a month," said Kloza. "By December a lot of places are going to see gasoline at $2 or less."

Americans are showing much excitement towards the changes in gas prices. Many Americans are taken towards social media to express their expectations.

Student Ashley Johnson says she checks her social media daily for current news and the “in the know.”

“I first found out about gas prices on Facebook. One of my friends posted a picture of a gas sign and it was two dollars and nineteen cents, so you know what I did, filled her up,” said Johnson laughing. “I know people that will drive almost 15 miles out just for cheaper gas.”

Other Americans have mentioned how their jobs are miles away from their homes and that by gas being lower, its saving them more money.

"[Iran] will only add to the oil glut on the market and increase the selling pressure," wrote Naeem Aslam, chief market analyst at Ava Trad

 Details of how sanctions will be lifted are not yet known. Some critics in Congress want to keep U.S. sanctions in place, but President Obama has vowed to veto any such efforts.

 Even if U.S. sanctions do stay in place for a while, the flow of Iranian oil to Europe will push down prices in global oil markets. Iran could add as much as 500,000 barrels of oil per day to worldwide markets by the end of this year, according to experts at a recent Credit Suisse conference on Iranian sanctions and oil.

 The International Energy Agency estimates Iran could add as much as 800,000 barrels a day months after sanctions are lifted. Another 30 million barrels of Iranian crude are estimated to be in storage and ready for sale, according to FACTS Global Energy, an industry consultancy.
 

Kloza said Iran will add even more oil to the markets in 2016 as it improves its oil industry's infrastructure.