Image source: Car World Automotive
On Wednesday, AAA reported that the national average for regular gasoline declined by three cents, dropping prices to $ 4.16 per gallon.
The pump price drop continues to relieve people, especially with inflation and the shrinking economy.
The national average of gas prices has fallen for 50 consecutive days.
On June 14, gas prices hit an average high of $ 5.02. Since then, gas prices have fallen by 86 cents. Last month, the national average was down 65 cents.
AAA reported that nineteen states have average gas prices below $4, including Ohio, Iowa and Wisconsin.
The factors of the fall in prices
The drop in gasoline prices can be attributed to several reasons – from recession fears that pushed oil prices lower to less American driving as prices surged above $5 a gallon.
“When people pay, and they see $100 for the bill, they panic and become apoplectic,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service.
The Biden administration’s unprecedented release of emergency oil from the Strategic Petroleum Reserve also played a role.
However, Kloza acknowledged that quantifying the impact was not easy.
Possibility of more price reduction
Whatever the reason, falling prices at the gas pump have lifted the spirits of consumers struggling with high prices for groceries, rent and other necessities.
While the average gasoline price across the country is $4.16 a gallon, Kloza pointed out that high prices in places like California add to the figure.
Meanwhile, OPIS reports the average price is $3.99.
“This streak has more room to run,” Kloza said.
The president of consulting firm Lipow Oil Associates, Andy Lipow, expects the national average to drop to $4.10 a gallon within seven to 10 days.
Lipow expects the average Labor Day price to drop to $4.
The oil situation
On Wednesday, oil prices took a deep dive, closing at levels not expected since Russia invaded Ukraine.
The losses came as a new government report revealed an unexpected rise in crude oil and gasoline inventories, prompting people to wonder about their energy needs.
The US fell 4% and was trading at $90.66 a barrel. The number is the lowest since February 10, two weeks before Russia invaded Ukraine.
Meanwhile, Brent, the global benchmark, fell more than 3%.
Oil prices have fallen over the past few days and weeks on concerns about a global economic slowdown.
On March 8, barrels closed at $123.70. Since then, US oil prices have fallen about 27%. Oil prices fell on Wednesday after the US Energy Information Administration said weekly oil inventories rose by 4.5 million barrels last week, ahead of expectations of a decline.
Meanwhile, gasoline inventories also rose slightly.
The oil market initially rallied on Wednesday as OPEC+ announced an agreement to increase production slightly from next month.
According to Rapidan Energy Group, the deal represents the lowest percentage increase in production in OPEC history.