According to AAA, which analyzes gas prices, the national average price for regular gasoline as of March 9 was $3.467 per gallon. Compared to some of this year’s pricing, it’s a significant bargain.
The price reduction is most noticeable when comparing the current average to peak pricing; it had decreased by 37% from June 2022, when the average gallon price was $5.006 in the United States, according to statistics from the EIA.
It’s still less expensive when you go further back and contrast current pricing with those from early March of the previous year. According to AAA data, the average price of petrol is currently around 28 cents less expensive than it was a year ago.
What Causes Price Drops?
Several factors have contributed to the drop in gas prices.
In the commodities market, it’s a well-known adage that high prices are the cure for high prices. And it has come to pass. In other words, low demand reduces price increases as a result of high pricing. Due to high fuel prices, drivers had to look for how to get a personal loan guide by Trice or other sources of extra cash to manage some money to fill up their cars.
Although some driving is necessary—for example, to go to work—with costs at record highs, consumers may opt against going on a road trip or to carpool with friends instead. Government consumption statistics, which indicate a decline in demand, have revealed this to be the case.
Additionally, some states have halted their gas taxes, artificially bringing down costs. However, the drop in oil prices is the primary cause of the downturn. Crude makes up more than 50% of the cost of gasoline, making it the single biggest factor affecting pricing.
After Russia invaded Ukraine in March, the U.S. oil benchmark West Texas Intermediate crude surged beyond $130 per barrel, rocking the world energy markets. WTI traded at that price for the first time since 2008. However, since that time, both oil and gasoline prices have declined.
China’s demand has also been weak as it fights Covid instances there. Additionally, in a bid to restrain rising oil prices, the United States has taken unprecedented action by releasing record volumes of oil from the Strategic Petroleum Reserve.
In the run-up to the 2017 midterm elections, the cost of gasoline has become a significant issue for the White House, and President Joe Biden has frequently stated that his government is doing everything it can to make life easier for customers.
Which Way Are Gas Prices Going?
The majority of analysts do not anticipate a short-term price increase unless an unexpected event occurs, such as a major hurricane that stops oil production in the Gulf of Mexico or floods refineries along the Gulf Coast. Even if hurricane season is still in effect, that has happened previously. To reach 223.6 million bbl, the total domestic gasoline stockpiles increased considerably by 4.5 million bbl.
The countrywide average gasoline price decline that has lasted for the past 58 days may shortly halt. In addition to the storm threat, refineries will need to slow down because they have postponed maintenance work, and that work cannot be postponed indefinitely.
How Much Will Gas Prices Decline?
U.S. gas prices can be greatly impacted by several factors: the global economy, demand for oil and gas, running of refineries and pipelines, the fuel blend federal regulations, taxes imposed on fuel consumption rates, weather conditions as well as geopolitics situations in different countries. The resulting changes are often drastic – take June 2020’s record-high average price of a gallon, just above $5 compared to today, where it is more than $1.80 cheaper!
With petrol prices on the down, Americans may resume their usual driving patterns, which would boost demand. In general, we can see that the statistics reflect a steady downward trend in gasoline prices, which saves drivers a lot of money.
But as the temperatures start to heat up, so will gasoline prices. The special summer blend of gas is designed to reduce emissions during peak months and requires a more costly refining process, which adds approximately 5-10 cents per gallon of fuel. In light of this expected increase in cost at the pump, motorists should anticipate higher prices throughout the summertime.
How Does the Cost of Gas Work?
Long before the gas arrives at your local station, a number of complicated factors that affect pricing are already in play. According to data from the Mercatus Center at George Mason University in Virginia, consumer confidence in the nation’s economic situation tends to decline as petrol prices rise.
What you should know regarding how gas prices operate is as follows:
At the pump, there are four different gasoline kinds that have varying prices. The octane rating, a gauge of fuel stability, divides standard, midgrade, and premium gasoline into three categories (the pressure at which a fuel will combust in an engine).
- Regular is the most affordable.
- Super or mid-grade is less expensive than premium and diesel but more expensive than normal.
- Most costly non-diesel gasoline is classified as premium or super premium.
- In vehicles with diesel engines, such as freight trucks and buses, diesel, also known as distillate fuel oil, is utilized. It is the priciest fuel available on the retail market.
Low oil Prices
In the meanwhile, as Wednesday’s market closed, WTI went up by 64 cents to finish at $77.69. The surge in crude prices was caused by a combination of factors.
The rise of manufacturing activity in China last month indicated that global oil demand might be more active than expected this year. The EIA report stated that domestic and commercial crude inventories rose 1.2 million bbl, reaching 480.2 million bbl over the course of last week were two contributing causes for the sudden spike in price values yesterday evening.
Gasoline prices are plummeting so quickly that they are starting to put actual money back in drivers’ pockets, confounding predictions and providing an unexpected holiday present. Right before Russia’s invasion of Ukraine sparked a worldwide energy crisis, gas prices were as low as they are right now.