William Simpson
Gas prices are falling across the country, a pleasant surprise for North American drivers since fuel prices typically rise this time of year.
The average price of regular unleaded gas in the U.S. was $3.44 per gallon on Monday, down about 9 cents from the previous week. according to for AAA. That’s 19 cents less than a month ago and 14 cents less than last year, according to the auto club.
Gas prices are falling because fuel demand has weakened and oil prices have declined, energy experts say, an unusual set of circumstances for the summer season when fuel demand typically peaks as more Americans take road trips on vacation.
“Not only did gas prices plummet in nearly every state last week, but nearly every state also saw prices drop compared to the previous month,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a note. on Monday. “With the declines, Americans will spend about $425 million less per week on gasoline than they did a year ago.”
Americans cut back on travel
Gasoline demand fell to about 8.94 billion barrels per day last week, below the 10 billion barrels needed per day at the same time last year. according to to the US Energy Information Administration. One reason fuel demand has fallen appears to be that Americans don’t travel as much as they used to, one expert noted.
“Demand is a little sketchy,” said AAA spokesman Andrew Gross. “Traditionally – pre-pandemic – after Memorial Day, demand would start to pick up in the summer.
In fact, Americans are tightening their wallets even more due to sticky inflation that is driving many consumers to change your habits. Demand for gasoline has also fallen as more drivers opt for electric or hybrid vehicles, experts said.
The drop in gas prices is also notable given that oil companies are now switching to their summer fuel blend, which is uniquely designed not to evaporate as quickly in warmer climates. Refineries produce more than 14 types of summer blend due to different state regulations, making the production process even longer, increasing prices.
Additional Factors Fueling Price Declines
Still, other factors are also at play. The Biden administration announced last month that it would release 1 million barrels of gasolineor about 42 million gallons, from a reserve in the Northeast with the aim of lowering prices at the pump.
Experts also point to the costs of refrigeration oil. Prices at the pump are highly dependent on crude oil, which is the main ingredient in gasoline. U.S. benchmark West Texas Intermediate crude oil has remained around $70 per barrel in recent weeks, closing below $78 per barrel on Monday. That’s “not a bad place to be,” Gross said.
“This price drop party is escalating and I expect additional falls before July 4th for gasoline and diesel prices,” De Haan said.
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 oil-producing countries, which previously contributed to rising energy prices.
—The Associated Press contributed to this report.
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