October 6, 2022

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US gas prices fall below $4 a gallon, says AAA

US gas prices fall below $4 a gallon, says AAA

US gas prices dipped below $4 a gallon on Thursday, falling to their lowest level since March, in a sign of relief for Americans grappling with historically high inflation and a political boost to the President Bidenwho was pressured to do more to bring prices down.

The national average cost per gallon of regular gasoline is $3.99, According to AAA. This is still higher than it was a year ago but far below the peak Nearly $5.02 in mid-June. The average price has decreased for 58 consecutive days.

Energy costs are fueling broad measures of inflation, so the decline is also good news for policy makers who have struggled to contain rising prices. It’s a welcome development for Mr. Biden, who has spent recent weeks Overlooking the drop in gasoline pricesEven as he pledged to do more to cut costs. Mr. Biden criticized the oil companies for what they have record profitsand this year released some The nation’s oil reserves In an effort to reduce price pressures.

More than half The cost of gasoline at the pump It is determined by global oil prices, which have fallen to their lowest level since the war in Ukraine began in February, a drop that partly reflects growing concern about a global recession that will hurt demand for crude.

Cecilia Ross, chair of the White House Council of Economic Advisers, said, He said in a statementciting it as one example of “encouraging economic developments” in recent times.

For consumers, lower gas prices provide a respite from a shaky economyAnd the rapid inflation and other concerns. “We have new diseases surging and inflation, and people are expecting a recession,” said Zindy Contreras, a student and part-time waitress in Los Angeles. “If I had to not worry about consuming my $70 gas tank, it would be a huge relief, for once.”

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Ms. Contreras was filling her 2008 Mazda 3 only halfway as a result of the price hikes, which cost her $25-30 per visit to the pump, and she’s found opportunities to gather in the car with friends. These days, Ms. Contreras usually gets gas twice a week, driving 15 miles to and from work each week and an additional 10 to 50 miles a week, depending on her plans.

National average price masks Wide regional differences. Prices vary according to the health of local economies, proximity to refineries and state taxes, said Devin Gladden, a spokesperson for the AAA.

In California, for example, regulations to reduce pollution make driving more expensive, with gas now averaging $5.38 per gallon in the state, with some counties reporting averages over $6. In Georgia, which has lower gas taxes and is close to refineries, the average price for a gallon of gas statewide is about $3.55.

But in general, the general decline in gas prices reflects a number of factors: weaker request Because of rising costs and a sharp drop in global oil prices in recent months, taxes on gasoline have been suspended in a handful of countries.

Almost two thirds of the people In a recent AAA survey They said they changed their driving habits due to the higher prices, mostly by making fewer trips and combining errands. And on Thursday, the group of oil-producing countries known as OPEC down revision Its forecast for global oil demand this year.

Whatever the reasons, the lower prices are a welcome change for drivers whose extra expenses — often $10 to $15 extra for a tank of gas — have become another hurdle as they seek to get their lives back to normal like the coronavirus pandemic. Eases.

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“The affordability pressure becomes very real when you see these higher prices at the gas pump,” said Beth Ann Bovino, chief US economist at S&P Global. “So, in that sense, it’s definitely a positive sign for those people who are struggling.”

This protection—money not spent on gasoline that can go elsewhere—also extends to businesses, particularly as the price of diesel fuel drops. Diesel, which is used in fuels, for example, agricultural equipment, construction machinery and long-distance trucks, also fell from a record low in June, albeit at a slower pace than gasoline prices.

The gas price drop is also good news for the economy, as companies face less pressure to pass on energy costs to their customers – a move that will add to the country’s inflation problem.

The government reported this week that consumer price inflation slowed in July to a still-high annual rate of 8.5 percent, down from 9.1 percent in June, thanks in large part to lower gasoline prices. If it continues, the slowdown in inflation could allow the Federal Reserve to ease its campaign to raise interest rates.

Even as they watch prices drop, some are wondering if this is a temporary reversal.

“I’m not ready to rise a bit again and then here I am struggling to fill my closet,” said Christina Billiard, a 27-year-old fashion influencer in Bridgeport, Connecticut.

Ms. Billiard bought a Jeep Wrangler last year but now regrets buying it because the car is not as fuel-efficient as the Toyota Camry she drove before. To work, she sometimes needs to drive to her TikTok and Instagram account locations, the platforms through which she promotes brands, and to attend events in New York City, which is about 60 miles from her home.

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Connecticut is one of the states that has suspended its gasoline taxes until November. And Mrs. Billiard, who used to spend $95 to $100 a week to get her jeep fitted, is now paying $74 to $80. However, she is tired of the high tab.

“I’m trying to figure out, how long will this last?” She said.

This is a difficult question to answer. Oil prices are volatile and subject to myriad forces, many of which are difficult to predict. There are many reasons why they might be rising again: the trajectory of the war in Ukraine could hamper global oil supplies, and energy investors’ opinions about the economy or Hurricanes later this year It could damage Gulf Coast refineries and pipelines, and throttle supplies.

For now, though, the continued fall in the cost of fuel is providing Americans with a respite.

“If gasoline prices remain at or near the levels they reached, this will mean more protection for households,” Bovino said.