Image source: Car World Automotive
On Wednesday, AAA reported that the national average for regular gasoline continued to drop, falling three cents to $4.16 a gallon.
The sinking price at the pump continues to give people relief, especially with the inflation and contracting economy.
The gas prices
For 50 consecutive days, the national average of gas prices dropped.
On June 14, gas prices reached an average high of $5.02. Since then, gas prices have tumbled by 86 cents.
In the past month, the national average was down by 65 cents.
AAA reported that nineteen states have average gas prices below $4, including Ohio, Iowa, and Wisconsin.
Read also: Hot summer could cause gas prices to go higher
Factors to the dropping prices
The declining gas price can be attributed to several reasons – from recession fears that knocked oil prices down to Americans driving less when the prices soared above $5 a gallon.
“When people pay, and they see $100 for the bill, they panic and become apoplectic,” said global head of energy analysis at the Oil Price Information Service Tom Kloza.
The unprecedented release of emergency oil by the Biden administration from the Strategic Petroleum Reserve also played a factor.
However, Kloza acknowledged it was not easy to quantify the impact.
Room for price drop
Regardless of the reason, the declining prices at gas pumps have boosted the morale of consumers struggling with high prices on food, rent, and other everyday items.
While the average price of gas across the country is $4.16 a gallon, Kloza pointed out that the figure is lifted by high prices in places like California.
Meanwhile, OPIS reports that the median price is $3.99.
“This streak has more room to run,” said Kloza.
President of consulting firm Lipow Oil Associates Andy Lipow expects the national average to drop to $4.10 a gallon within seven to ten days.
Lipow expects the average price to fall to $4 on Labor Day.
Read also: Will $4.50 Gas Fuel Work From Home With US Businesses?
The oil situation
On Wednesday, oil prices took a deep dive, finishing at unforeseen levels since Russia invaded Ukraine.
The losses occurred when a new government report revealed an unexpected build in crude and gasoline inventories stockpiles, prompting people to question the energy demand.
The United States tumbled by 4%, costing $90.66 a barrel.
The number marks the lowest it’s gotten since February 10, two weeks before Russia invaded Ukraine.
Meanwhile, Brent crude, the world benchmark, lost more than 3%.
Economic slowdown
Oil prices have dropped lower in the past couple of days and weeks due to concerns about a global economic slowdown.
On March 8, barrels were closing at $123.70. Since then, US oil has been down by about 27%.
Oil prices dropped on Wednesday after the US Energy Information Administration revealed weekly oil inventories jumped by 4.5 million barrels last week compared to expectations for a decline.
Meanwhile, gasoline stockpiles also slightly increased.
On Wednesday, the oil market initially rallied when OPEC+ announced an agreement to slightly increase production starting next month.
According to Rapidan Energy Group, the agreement amounts to the smallest output increase on a percentage basis in OPEC history.
References:
US gas prices fall for 50 straight days
Here’s why gas prices are sinking
Opinions expressed by NY Weekly contributors are their own.
