Gasoline prices are once more falling within the US, which is a relief for drivers as they now pay a little bit less for gas.
The national average price of gasoline was about $3.44 on Monday, in keeping with AAA, down about 9 cents from every week ago – the biggest one-week drop the car club has recorded thus far in 2024. Monday’s average price was also greater than 19 cents lower than a month ago and greater than 14 cents below the extent throughout the same period last yr.
Why have prices at gas stations fallen so sharply recently? Industry analysts attribute this to a combination of weak demand and robust supply – in addition to relatively low oil prices worldwide.
Here’s a summary of what you might want to know.
Why are gas prices falling?
There are several aspects contributing to the present drop in gasoline prices. First, there could also be fewer people on the road.
“Demand is just pretty low,” said AAA spokesman Andrew Gross, pointing to trends from last yr and potential aftereffects of the COVID-19 pandemic. “Traditionally – before the pandemic – demand started to rise after Memorial Day in the summer. And we’re just not seeing that anymore.”
Last week, data from the Energy Information Administration showed that U.S. gasoline demand fell to about 8.94 billion barrels a day. That should sound like lots — but before the pandemic, consumption was more like 10 billion barrels a day this time of yr, Gross noted.
Beyond the pandemic-specific impacts, experts indicate that top gasoline prices following Russia’s invasion of Ukraine in 2022 and ongoing inflation could have prompted many Americans to alter their driving habits. Other contributing aspects could include the increased variety of fuel-efficient cars in addition to electric vehicles on the roads today, Gross said.
Some of those aspects are still seasonal. Patrick De Haan, head of petroleum evaluation at GasBuddy, noted that gas prices typically drop in early summer because of refinery capability. At this time of yr, he said, lots of the aspects that drive prices up in late winter and spring – particularly refinery maintenance – are not any longer present.
“Once refinery maintenance is completed, production or utilization of the country’s refineries increases – and that contributes to increasing supply,” De Haan said. And that stronger supply, coupled with weaker consumption, has led to a “somewhat more significant” price decline this yr. He added that U.S. refinery utilization is at one in every of its highest levels for the reason that pandemic.
Separately, the Biden administration announced last month that it will release a million barrels of gasoline, or about 42 million gallons, from a reserve within the Northeast to assist lower prices on the pump this summer. But De Haan noted that such a move would have little impact on a national level — 42 million gallons is reminiscent of lower than three hours of day by day U.S. gasoline consumption.
“What we are seeing now with (falling) gasoline prices is actually mainly due to seasonal and predictable economic factors,” he said.
What about oil prices?
Experts also point to the price of cooling oil. Prices on the pump are heavily dependent on crude oilthe predominant component of gasoline.
West Texas Intermediate oil, the U.S. benchmark, has remained at around $70 a barrel in recent weeks and closed below $78 a barrel on Monday. That’s “not a bad position,” Gross said, noting that the worth of crude oil normally has to rise above $80 to place more pressure on pump prices.
Oil prices might be volatile and difficult to predict as they’re subject to many global influences, including production cuts by OPEC and allied oil producing countries, previously contributed to rising energy prices.
OPEC+ recently announced plans to expand three different cutting sets totaling 5.8 million barrels per day – however the alliance also set a timetable for the resumption of some production, “which is probably the reason for the somewhat pessimistic reaction of the oil price,” said De Haan.
Could prices rise again?
The future is unpredictable, but unless there are major unexpected disruptions, prices could proceed to fall, say each Gross and De Haan.
At this time of yr, experts pay particular attention to hurricane risks, which may cause significant damage and result in refinery shutdowns.
“Prices are rising out of fear,” Gross said. In the U.S., he added, concerns are particularly heightened when a hurricane hits the Gulf of Mexico – and even when it doesn’t make landfall, refineries may cut back operations out of caution. The impacts might also vary by region.
But unless something unexpected happens, analysts like De Haan expect the national average to remain within the $3.35 to $3.70 per gallon range. Gasoline prices typically fall much more in the autumn, and it’s possible the national average could possibly be below $3 by late October or early November, he said.
Which states have the bottom gas prices today?
Of course, regardless that gasoline prices are falling across the country overall, average prices will all the time be cheaper in some states than in others because of aspects similar to supply from nearby refineries or local fuel demand.
According to AAA data, Mississippi had the bottom average gasoline price on Monday at about $2.94 per gallon, followed by Oklahoma at $2.95 and Arkansas at just below $2.97.
Meanwhile, California, Hawaii and Washington had the very best average prices on Monday – about $4.93, $4.75 and $4.41 per gallon, respectively.
