U.S. Gas Prices Drop, Bringing Some Relief to Drivers

NEW YORK (AP) Gasoline prices are falling once again in the United States, bringing some relief to drivers who now pay a little less to fill up their tanks.

The national average gas price Monday was about $3.44, according to AAA. That's down about 9 cents from a week ago, marking the largest one-week decline the auto club has recorded so far in 2024. Monday's average was also more than 19 cents less than a month ago and more than 14 cents below the level observed this. times last year.

Why the recent drop in prices at the pump? Industry analysts point to a combination of lackluster demand and strong supply, as well as relatively weak oil prices globally.

Here's a look at what you need to know.

The drop in gas prices today, explained.

Several factors contribute to the current decline in gas prices. For starters, fewer people may be hitting the road.

The request is simply superficial, said AAA spokesperson Andrew Gross, pointing to trends seen last year and potential lingering impacts of the COVID-19 pandemic. Traditionally pre-pandemic after Memorial Day, demand would begin to pick up in the summer. And we don't see him anymore.

Last week, Energy Information Administration data showed that U.S. gasoline demand had fallen to about 8.94 million barrels per day. That may still seem like a lot, but before the pandemic, consumption could get closer to the 10 million barrels per day range at this time of year, Gross noted.

Beyond pandemic-specific impacts, experts note that high gasoline prices seen after Russia's 2022 invasion of Ukraine and persistent inflation may have led many Americans to change their habits driving. Other contributing factors could be the growing number of fuel-efficient cars, as well as electric vehicles, on the roads today, Gross said.

Some of this is still seasonal. Patrick De Haan, head of oil analysis at GasBuddy, noted that gas prices typically decline in early summer due to refinery capacity. At this time of year, he said, many of the factors that drive up prices in late winter and early spring, including refinery maintenance, are no longer present.

Once refinery maintenance is completed, production or utilization of the country's refineries increases, contributing to increased supply, De Haan said. And this stronger supply, combined with lower consumption, has caused prices to fall a little more noticeably this year. He added that U.S. refinery utilization is reaching some of its highest levels since the pandemic.

Separately, the Biden administration announced last month that it would release 1 million barrels of gasoline, or about 42 million gallons, from a Northeast reserve in an effort to lower prices at the pump this summer. But De Haan noted that such action has little impact nationally: 42 million gallons equate to less than three hours of daily U.S. gas consumption.

In reality, what we're seeing now with (falling) gas prices…is primarily due to seasonal and predictable economic factors, he said.

What about oil prices?

Experts also point to the costs of cooling oil. Pump prices are highly dependent on crude oil, which is the main ingredient in gasoline.

West Texas Intermediate crude, the U.S. benchmark, has remained in the mid-$70s a barrel in recent weeks, closing below $78 a barrel on Monday. That's not a bad place to be, Gross said, noting that the cost of crude typically needs to exceed $80 to put more pressure on prices at the pump.

Oil prices can be volatile and difficult to predict because they are subject to many global forces. This includes production cuts by OPEC and allied producing countries, which have already contributed to rising energy prices.

OPEC+ recently announced plans to extend three different rounds of cuts totaling 5.8 million barrels per day, but the alliance also set a timetable for restoring some production, which is likely why the price of oil had a somewhat bearish reaction, De Haan said.

Could prices rise again?

The future is never promised. But, if there are no major unexpected disruptions, Gross and De Haan say prices could continue to fall.

At this time of year, experts are particularly attentive to the risks of hurricanes which can cause significant damage and shut down refineries.

Prices are moving because of fear, Gross said. In the United States, he added, concern particularly increases when a hurricane enters the Gulf of Mexico and even if it doesn't ultimately make landfall, refineries could halt operations out of an abundance of caution. Impacts may also vary by region.

But barring anything unforeseen, analysts like De Haan expect the national average to remain between $3.35 and $3.70 per gallon this summer. Gas prices typically fall even further in the fall, and it's possible the national average could be below $3 in late October or early November, he said.

Which states have the lowest gas prices today?

While gas prices nationwide are collectively falling, some states still have cheaper averages than others, due to factors ranging from nearby refinery supplies to local fuel needs.

As of Monday, according to AAA data, Mississippi had the lowest average gas price, at about $2.94 per gallon, followed by $2.95 in Oklahoma and just under $2.97 in Arkansas.

Meanwhile, California, Hawaii and Washington had the highest average prices on Monday, around $4.93, $4.75 and $4.41 per gallon, respectively.

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This story has been corrected to note that U.S. gasoline demand fell to about 8.94 million barrels per day, not 1 billion.

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