U.S. gasoline prices fell below $4 a gallon on Thursday, returning to their lowest level since March, a drop that provided relief to Americans struggling with the skyrocketing cost of everything from groceries on rent.
The national average cost of a gallon of regular gasoline now stands at $3.99, according to AAA. That’s higher than a year ago, but still well below the peak near $5.02 in mid-June. Energy costs are fueling general measures of inflation, so the decline is also good news for policymakers who have struggled to contain price increases and for President Biden, who has pledged reduce gas costs.
The national average includes a wide range of prices, from nearly $5 per gallon in Oregon and Nevada to around $3.50 in Texas and Oklahoma. But, broadly speaking, the decline reflects a number of factors: weaker demand, as high costs have kept some drivers off the roads; a sharp drop in world oil prices in recent months; and the fact that a handful of states have suspended gasoline taxes.
Whatever the causes, the lower prices are a welcome change for drivers for whom the added expense of often an extra $10-15 for a tank of gas had become another hurdle as they sought to return to their normal lives. after the coronavirus pandemic.
We have new diseases and rising inflation, and people are expecting a recession, said Zindy Contreras, a college student and part-time waitress in Los Angeles, where gas prices are near $5.40. the gallon. If I didn’t have to worry about my gas tank costing me $70, that would be a huge relief, for once.
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Ms. Contreras only half-filled her 2008 Mazda 3 due to higher prices, which cost her between $25 and $30 each visit to the pump, and she had found opportunities to carpool with friends . These days, Ms Contreras typically takes gas twice a week, driving 15 miles to and from work each week and an additional 10 to 50 miles a week, depending on her plans.
The pressure on affordability becomes very real when you see those high prices at the gas pump, said Beth Ann Bovino, chief U.S. economist at S&P Global. So in that sense, it’s definitely a positive sign for people who are struggling.
This unspent cushion money for gasoline that can go elsewhere also extends to businesses, especially as the price of diesel fuel also drops. Diesel, which is used to power, for example, farm equipment, construction machinery and long-haul trucks, also fell from June’s record, but at a slower pace than gasoline prices .
Lower gas prices are also good news for the economy, as companies are under less pressure to pass on energy costs to their customers, which would add to the country’s inflation problem.
The government announced this week that consumer price inflation slowed in July to an annual rate of 8.5% from 9.1% in June, largely thanks to lower petrol prices . If it persists, the slowdown in inflation could allow the Federal Reserve to ease its interest rate hike campaign.
It would also be something of a victory for Mr Biden, who has spent the past several weeks clamoring for lower gas prices, even as he says he expects to do more to cut costs. Mr Biden has criticized oil companies for their record profits thanks to high oil and gas prices, and this year he released some of the nations’ oil stocks in a bid to prevent prices from rising too fast.
I will continue to do what I can to bring down the price of gasoline at the pump, he said during a briefing in late July.
Even as they watch prices fall, economists and consumers say they wonder if this is a temporary reversal.
I’m not ready for it to go a little higher and then I’m struggling to fill my tank, said Christina Beliard, a 27-year-old fashion influencer in Bridgeport, Connecticut.
Ms. Beliard bought a Jeep Wrangler last year but now regrets the purchase because the vehicle isn’t as fuel efficient as the Toyota Camry she used to drive. For work, she sometimes has to drive to her accounts on TikTok and Instagram, platforms on which she promotes brands, and to attend events in New York, about 60 miles from her home.
Connecticut is one of the states that has suspended its gasoline tax until November. And Ms. Beliard, who used to spend $95 to $100 a week to fill up her Jeep, is now paying $74 to $80. Yet she is tired of the high tab.
I’m trying to figure out, how long is this going to last? she says.
This is a difficult question to answer. More than half of the cost of gasoline at the pump is determined by global oil prices, and these are volatile and subject to a myriad of forces, many of which are difficult to predict.
Oil prices fell to their lowest point since the start of the war in Ukraine in February, a drop that reflects growing concern that a global recession will hit demand for crude. Prices could rise again for several reasons: the tide of war could further hamper global oil supplies, energy investors’ views on the economy could change, and hurricanes later this year could damage refineries and pipelines. from the Gulf Coast, choking off the supply.
For now, however, the steady decline is providing respite for Americans worried about their finances as the economy slows.
If gasoline prices stay at or near the levels they hit, that would mean a lot more cushion for households, Ms. Bovino said.
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