Topline
Gas prices in the U.S. have fallen nearly $1.50 since hitting an all-time record last June, even as gas demand starts to crawl upwards heading into the summer, and experts believe prices at the pump won’t go anywhere near last year’s peak as oil prices continue to fall.
Gas prices have fallen nearly $1.50 since their peak last June.
Key Facts
The national average price for a gallon of gasoline dropped to $3.59 on Wednesday, down from $3.69 last month and a far cry from last June’s all-time record of $5.02, according to data from AAA.
The drop in gas prices coincides with a drop in oil prices: The international benchmark Brent Crude Oil has dropped 7.27% on the year to $73.30 per barrel, while the U.S. benchmark West Texas Intermediate dropped more than 10% over that time to $69.23—a drop that AAA spokesperson Andrew Gross said “appears to mitigate any increases at the pump.”
Gas demand in the U.S., meanwhile, increased only narrowly to 9.22 million gallons per day during the week ending June 3, according to Energy Information Administration data, a slight uptick from 9.10 million gallons the week before, though it’s down slightly from last month.
GasBuddy petroleum analyst Patrick De Haan said he’s “building confidence” the national average could dip below $3 per gallon this fall—De Haan said earlier this spring he believes there’s an “extremely long shot” of gas prices hitting the dreaded $5 mark any time soon.
Key Background
Crude oil prices have been on a rollercoaster ride since the start of 2022, surging to near-record levels last spring following Russia’s invasion of Ukraine before falling to a 15-month low one year later. Oil prices spiked 2.5% last week following oil producing giant Saudi Arabia’s decision to cut production by 1 million barrels per day, sending the Brent Crude Futures index to $78 per barrel and the West Texas Intermediate to $73.60—both benchmarks have since cooled to $73.20 and $69.15, respectively. OPEC+ countries announced another round of output cuts in April, sending the Brent index to a two-month high of $84.19 per barrel, a major shake-up in the international energy market. Dramatic changes in oil prices tend to coincide with changes in gas prices, with the price of oil accounting for roughly 56% of the price drivers pay at the pump, according to AAA.
Contra
Despite cooling prices at the pump, drivers in nine states are still paying more than $4, on average, for a gallon of gas. Prices are highest in California, which is routinely the leader in gas prices due to a combination of high taxes and the use of a cleaner but more expensive summer fuel blend, with the average price for a gallon costing $4.89, followed by Washington ($4.84), Hawaii ($4.74) and Oregon ($4.48), according to AAA.
Further Reading
Will Gas Prices Hit $5 Again Soon? Analyst Says ‘Extremely Long Shot’ (Forbes)
Crude Oil Prices Rise 2.5% After Saudi Arabia Says It’s Cutting 1 Million Barrels A Day (Forbes)
Source: https://www.forbes.com/sites/brianbushard/2023/06/14/gas-prices-fell-150-since-record-last-june-and-experts-say-they-could-keep-falling/