DAVID GREENE, HOST:
All right, if one of your New Year's resolutions was to spend less money, you might be getting a little help right now from really low gas prices - so low, maybe you don't even want to jinx it by asking why the gas prices are low. But NPR's Camila Domonoske is going to tell us.
CAMILA DOMONOSKE, BYLINE: At the Costco in Washington, D.C., gas is going for $2.05 a gallon. And Sylvie Tiadem is pumped.
SYLVIE TIADEM: You see, $26, oh, my goodness.
DOMONOSKE: She says she was paying nearly 40 bucks to fill up her sedan back when gas prices were higher.
TIADEM: Twenty-six dollars, I'll take it any day. Expenses are growing everywhere. But when one goes down, I'm happy.
DOMONOSKE: Gas prices vary across the country. They're cheaper in the South and higher in the West. But in general, drivers like to Tiadem have been happy for months now.
JEANETTE CASSELANO: Gas prices are cheap. That's the headline, and that's the good news for consumers.
DOMONOSKE: Jeanette Casselano is a spokeswoman for AAA.
CASSELANO: We started to see prices decrease in October. And they came down slowly but consistently since then. We started this year at $2.25, which is the cheapest price we've seen at the start of January in three or four years.
DOMONOSKE: This week, gas is selling for less than 2 bucks a gallon at more than a third of the country's gas stations. Gas is cheap because of a dramatic drop in crude oil prices that started in October. Kelsey Hallahan is with the Energy Information Administration.
KELSEY HALLAHAN: Crude oil is responsible for about just over 50 percent of gasoline prices. And when crude oil prices fall, we also see a fall in gasoline prices.
DOMONOSKE: And those crude prices fell because there's a global glut in oil. Saudi Arabia boosted production under pressure from President Trump. Meanwhile, America has become the largest producer of oil. And U.S. companies have been pumping more and more. Demand is not keeping pace. The world just doesn't need as much oil as it's been making. So why were American companies producing so much?
HALLAHAN: Largely, we think it's due to crude prices.
DOMONOSKE: Back to prices. Crude is cheaper now. But before October, oil companies were seeing dollar signs. Higher prices motivated them to get more oil out of the ground. Then all the new supply pushed prices back down. Now these lower prices put oil companies in a tougher position, although analysts say U.S. companies are handling the price drop OK. And it makes consumers very happy. It's more money in people's pockets.
That's especially important for middle-class and low-income people who put a bigger chunk of their disposable income toward fuel costs. Scott L. Montgomery is an author and affiliate faculty member at the University of Washington. He says gas prices have a huge psychological impact.
SCOTT L. MONTGOMERY: We have to remember that the price of gasoline is on very large signs everywhere we drive. And so it is the price that sticks in consumers' minds.
DOMONOSKE: A change in gas prices also changes consumer behavior in a way that can be out of proportion to the actual shift in their finances, Montgomery says.
MONTGOMERY: They believe that they're saving a lot more money than they actually are. And so they will buy more SUVs or bigger cars.
DOMONOSKE: So low gas prices can have larger consequences for society. If people are less worried about fuel efficiency, they have less incentive to reduce their contribution to climate change. But if there's one constant when it comes to gas prices, it's that they're always moving.
Saudi Arabia and other OPEC nations are cutting oil production now. And analysts predict an increase in gas prices this year as the global oil trade regains its balance. Camila Domonoske, NPR News.