NEW YORK — Gasoline prices are falling again in the US, providing some relief for motorists who are now paying a little less to fill their tanks.
According to AAA, the national average for gas prices was around $3.44 on Monday. That’s down about 9 cents from a week ago – which is the biggest one-week drop the motorcycle club has recorded so far in 2024. Monday’s average was also more than 19 cents less than a month ago and more than 14 cents below the level we saw. this time last year.
Why the recent price drop at the pump? Industry analysts point to a combination of subdued demand and strong supply – and relatively mild global oil prices.
Here’s an overview of what you need to know.
There are a number of factors contributing to the current declining gas prices. For starters, fewer people may be taking to the roads.
“The demand is quite superficial,” said AAA spokesman Andrew Gross, pointing to last year’s trends and the possible lingering effects of the COVID-19 pandemic. “Traditionally – before the pandemic – demand would start to pick up after Memorial Day in the summer. And we just don’t see it anymore.”
Last week, data from the Energy Information Administration showed U.S. gasoline demand fell to about 8.94 billion barrels per day. That may still sound like a lot, but before the pandemic, consumption at this time of year was closer to 10 billion barrels per day, Gross noted.
In addition to pandemic-specific impacts, experts note that high gas prices following Russia’s 2022 invasion of Ukraine and persistent inflation may have caused many Americans to change their driving habits. Other contributing factors could be the increased number of fuel-efficient cars and electric vehicles on the road today, Gross said.
Some of this is still seasonal. Patrick De Haan, head of petroleum analysis at GasBuddy, noted that gas prices typically drop in early summer due to refinery capacity. At this time of year, he says, many of the factors that drove prices in late winter and early spring – particularly refinery maintenance – are no longer in place.
“Once maintenance on the refineries is completed, production or usage of the country’s refineries goes up – and that contributes to rising supply,” De Haan said. And that stronger supply, combined with weaker consumption, has led to a “slightly more noticeable” price drop this year. He added that U.S. refinery utilization is at one of the highest levels since the pandemic.
Separately, the Biden administration announced last month that this would be the case releasing 1 million barrels of gasoline, or about 42 million gallons, from a northeastern reserve with the goal of lowering prices at the pump this summer. But De Haan noted that such action would have little impact nationally: 42 million gallons equates to less than three hours of U.S. daily gas consumption.
“Really, what we’re seeing now with (falling) gasoline prices … is primarily driven by seasonal and predictable economic conditions,” he said.
Experts also point to the costs of oil cooling. Prices at the pump are highly dependent on crude oilthe main component of gasoline.
West Texas Intermediate crude, the U.S. benchmark, has remained around $70 a barrel in recent weeks and closed Monday at less than $78 a barrel. That’s “not a bad situation,” Gross said, noting that crude oil prices typically need to rise above $80 to put more pressure on pump prices.
Oil prices can be volatile and difficult to predict because they are subject to many global forces. This also applies to production cuts by OPEC and related oil producing countries, which have done so has previously contributed to rising energy prices.
OPEC+ recently announced plans to do this expand three different sets of cuts a total of 5.8 million barrels per day – but the alliance also set a timetable for restoring some production, “which is probably why the oil price reacted somewhat bearishly,” De Haan said.
The future is never promised. But if there are no major unexpected disruptions, both Gross and De Haan say prices could continue to fall.
At this time of year, experts are paying particular attention to hurricane risks, which can cause significant damage and lead to refineries being shut down.
“Prices move on fear,” Gross said. In the U.S., he added, concern increases especially once a hurricane enters the Gulf of Mexico — and even if the hurricane ultimately does not make landfall, refineries may withdraw operations out of caution. The consequences may also vary by region.
But barring the unexpected, analysts like De Haan expect the national average to remain between $3.35 and $3.70 per gallon. Gas prices typically drop even further in the fall, and it’s possible the national average could fall below $3 in late October or early November, he said.
Of course, while gas prices are falling collectively across the country, some states will always have cheaper averages than others, due to factors ranging from nearby refinery supply to local fuel needs.
As of Monday, Mississippi had the lowest average gasoline price at about $2.94 per gallon, followed by $2.95 in Oklahoma and just under $2.97 in Arkansas, according to AAA data.
Meanwhile, California, Hawaii and Washington had the highest average prices Monday: about $4.93, $4.75 and $4.41 per gallon, respectively.