The national average price of gasoline fell below $4 per gallon this week for the first time in five months, providing marginal relief for cash-strapped American motorists.
The average price per gallon was $3.99 on Tuesday at locations tracked by fuel analysis platform GasBuddy. The firm said falling oil prices are most responsible for the dip, with Americans paying nearly $400 million less per day than they did in June.
That was down by more than $1 compared to the all-time high of $5.03 on June 14 as the Russia-Ukraine war further upended global fuel shipments that were already struggling to meet demand.
“We’ve never seen anything like 2022 at the pump, highlighted by once-in-a-lifetime events including the ongoing COVID-19 pandemic, which caused myriad imbalances, exacerbated by Russia’s war on Ukraine,” said Patrick De Haan, head of petroleum analysis for GasBuddy.
“As a result, we’ve seen gas prices behave in ways never witnessed before, jumping from $3 to $5 and now back to $3.99,” De Haan added.
Declining gas prices were a key reason for the decline in the Consumer Price Index in July. Headline inflation was 8.5% last month, down from 9.1% in June, as gas prices receded from record highs, according to Labor Department data released on Wednesday.
Gas prices have fallen steadily as the US economy and others around the world brace for the looming possibility of a recession. The price of oil, a key input for retail gas prices, has pulled back as the market prepares for weakening demand.
De Haan projects that gas prices will continue to fall by as much as 25 cents per gallon over the next few weeks – though he cautioned that the declines may not last.
“While the recent drop in gas prices has been most welcomed, the issues that led to skyrocketing prices aren’t completely put to bed, and still could lead prices to eventually climb back up, should something unexpected develop.”
West Texas Intermediate crude oil, the US benchmark, was trading below $90 per barrel as of Wednesday. Prices topped $120 per barrel as recently as June.
Gas prices have also fallen due to dwindling demand among drivers who have paid elevated prices throughout the year, according to AAA, which placed the current national average at $4.01.
“Oil is the primary ingredient in gasoline, so less expensive oil is helpful in taming pump prices,” said AAA spokesperson Andrew Gross. “Couple that with fewer drivers fueling up, and you have a recipe for gas prices to keep easing.”
President Biden and other top officials in his administration have claimed credit for the recent decline, arguing that targeted moves, such as the release of oil from the US strategic reserve, have helped to bring down prices.
Meanwhile, Republican lawmakers and other critics have griped for months that Biden’s crackdown on domestic energy producers helped drive prices to record heights.
Surging inflation and the subsequent fears of a recession as the Federal Reserve tightens monetary policy are set to be a major issue in the 2022 midterm elections.