The historical streak of low gasoline prices is over.
After sinking every day for more than three months, U.S. gas prices rose — by a penny — to $3.68 a gallon, on average on Wednesday, According to AAA.
Expires 98 consecutive days of Pump prices dropThe second longest recorded streak dates back to 2005.
The last time the national average price of gasoline rose was on June 14, when it rose He made a record $5.02. Prices have fallen every day since then, and Thursday would have marked the 100th consecutive day of declines.
The drop in gas prices was driven by a series of factors, including strong supply and weak demand as drivers refrained from price hikes and Unprecedented releases of emergency oil from the White House.
Another major factor that pushed gas prices down: growth Fears of a global recession It could hurt gas demand. People who have lost their jobs don’t have to drive to work, and even those who have jobs hold back on their spending during recessions.
The strong dollar It also helped bring down the price of gas, because crude oil is priced in dollars. This means that each dollar can buy more oil than if the value of the currency is stable or declining. The dollar index, which compares the value of the US currency to major foreign currencies, is up 15% this year. This also means that oil prices are rising faster for countries that do not use the dollar, weakening global demand.
At the same time, Russian oil flows It has held up better than feared despite sanctions and the war in Ukraine. The Russian invasion of Ukraine, and the sanctions that followed, helped cause a sharp rise in oil and gas prices. The average price on the day of the invasion was $3.54 per gallon, which is slightly lower than it is today. Russia announced on Wednesday that it will increase its size mobilization of forces Help lift crude oil futures by 2% in global markets.
Gas prices are likely to remain relatively close to current levels in the near term, said Tom Cluza, global head of energy analysis at OPIS, which tracks gas prices nationally at AAA.
“I don’t think you’re going to see a big move up or down,” he said recently, ahead of Wednesday’s modest price hike. He said that competing forces will affect prices in the near term.
US refining capacity remains limited. OPEC and other oil-producing countries recently agreed to this cut production. Both put upward pressure on prices.
Meanwhile, seasonal factors, such as the end of the summer driving season and the annual end of US environmental regulations requiring cleaner and more expensive blends of gasoline during the summer months, could help dampen prices. Also pushing prices lower: Oil traders remain concerned about the state of the global economy.
He said, “Crude oil is not behind speculative investment money at the moment.”
Kloza said wholesale gasoline futures suggest a sharp drop in gas prices by the end of the year, with gas under $3 a gallon likely to be common in most parts of the country by then. But he cautioned, “futures prices are a notorious indicator of what the future will hold.”
Although gas under $3 is still scarce—only 5% of 130,000 U.S. gas stations sell gas for less than that price, according to OPIS—relatively cheap gas is becoming more and more popular with the months of decline. Nearly one in four stations nationwide sell gas for less than $3.25 a gallon, and 56% sell gas for less than $3.50 a gallon.
Cheap gas has been a huge boost to the US economy, relieving inflationary pressure and giving Americans Extra money to spend. Since the typical American household uses about 90 gallons of gas per month, lower gas prices save these households about $120 per month than they have been paying since the peak in June.
A one-cent hike in gas prices is not a meaningful change for most drivers, and prices may fall again as global economic concerns grow along with fears that fuel demand will continue to decline.
However, if gas prices start to rise, it could undermine the Biden administration and the Federal Reserve’s efforts to keep inflation in check. Falling gas prices is the only reason for America Consumer prices It has generally remained flat over the past few months after the sharp rise in 2021 and the first part of this year.
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