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Can Gas Dive Below $2 a Gallon? Cheap Oil Brings Prices Down at the Pump

There is a worldwide glut of crude oil, but OPEC refuses to cut back production, causing prices to drop to nearly $40 a barrel.

There is a worldwide glut of crude oil, but OPEC refuses to cut back production. That means drivers will continue to see lower prices – maybe even less than $2 a gallon - at the pump this winter.

The Organization of Petroleum Exporting Countries decided Friday to raise its production ceiling to 31.5 million barrels of oil a day, up from 30 million barrels, sources told Reuters. Even at the previous level, oil prices have plunged to under $40 a barrel from nearly $110 in June 2014.

The decision isn't great for smaller, less wealthy members of OPEC, who could see their oil revenues fall. But it could be great for richer countries like Saudi Arabia that are hoping to squeeze out other producers like shale oil companies, which must spend more money to extract crude.

This is also good news for consumers looking to fill up their tanks for less. The current national average for gasoline is $2.05 a gallon, according to AAA. That is down from $2.73 one year ago and nearly $2.20 a month ago.

That could drop even further before Christmas, AAA predicts, all the way down to below $2 a gallon. People in 22 states, including Michigan, Missouri and Ohio, are already enjoying gas below the $2 mark.

Gas prices typically decline during winter months anyway, AAA noted, with OPEC policy only making things easier on drivers' wallets.