Drivers, start your engines: The average price of a gallon of regular gasoline is now $4.60, according to the AAA automobile club. That’s 40 cents lower than a month ago, when average prices peaked over $5 a gallon. The price also reflects the 30th consecutive day of declines.
AAA data from earlier this week shows that Texas, Ohio, Illinois and California are among the states with the biggest declines in gasoline prices.
“These savings provide significant respite for American families,” President Joe Biden said in a statement Wednesday. Biden noted that the sharp decline in prices was not reflected in this week’s appetizing inflation report, which showed that prices rose 9.1% on an annual basis in June, due to the dates covered by the data.
The skyrocketing gas prices earlier this year, caused by the Russian invasion of Ukraine, limited oil refining capacity and other factors, was a major driver of inflation in the United States. But now drivers are finally seeing much-needed relief at the pump.
Why are gas prices falling?
A modest increase in the supply of oil and gasoline in the United States eased pressure on prices. Patrick De Haan, head of oil analysis at price-tracking website GasBuddy, told Money in an email that much of the recent drop in gas prices is attributable to this “minor improvement “.
Simply put, inventory increases as demand decreases. On top of that, the Biden administration released oil from the U.S. strategic reserve to help deal with the crisis.
Gas prices are also closely tied to wholesale crude oil prices, which have risen from $120 a barrel in March to around $100 a barrel today. The oil market is volatile, but worries about a global economic slowdown have investors nervous. “Cheaper oil generally means cheaper gas,” AAA spokesman Andrew Gross said in a statement. blog post In Monday.
The growing fear of a recessionsays De Haan, also reduced oil consumption as Americans cut spending.
Where are gas prices going next?
De Haan says it’s possible prices will continue to fall “barring unpredictable disruptions, like hurricanes or refinery issues.” He projected that the average gasoline price could drop to $3.99 per gallon by mid-August, absent unexpected factors.
The United States Energy Information Administration is forecast that gasoline prices will average $4.05 per gallon for all of 2022. Given how high prices were in the first half of the year, that would mean significant declines in the months ahead.
Of course, this does not mean that you will be able to fill up with cheap gasoline at all stations in the country. Prices vary greatly locally. The average price of a gallon of gas in Utah is $5.14, according to AAA, compared to $4.14 in Texas.
But the national trend is still down — and depending on where you live, you may qualify for additional relief from your state. California sends state stimulus checks in the coming months to fight inflation, for example, and Florida has put in place a plan to suspend state gasoline taxes in October.
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