U.S. gasoline prices fell below $4 a gallon on Thursday, returning to their lowest level since March, a sign of relief for Americans struggling with historically high inflation and a political boost for President Biden, who has been under pressure to do more to bring prices down.
The national average cost of a gallon of regular gasoline now stands at $3.99, according to AAA. This is still higher than a year ago, but well below the peak near $5.02 in mid-June. The average price has fallen for 58 consecutive days.
Energy costs are fueling general measures of inflation, so the decline is also good news for policymakers who have struggled to contain rising prices. It’s a welcome development for Mr. Biden, who has spent recent weeks clamoring for lower gas prices, even as he pledges to do more to cut costs. Mr Biden has criticized oil companies for their record profits, and this year he freed up some of the country’s oil stockpile in a bid to reduce price pressures.
“I will continue to do what I can to bring down the price of gas at the pump,” he said during a briefing last month.
For consumers, falling gas prices offer respite from a faltering economy, rapid inflation and other worries. “We have new diseases and rising inflation, and people are expecting a recession,” said Zindy Contreras, a college student and part-time waitress in Los Angeles. “If I didn’t have to worry about my tank of gas costing $70, that would be a huge relief, for once.”
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Ms. Contreras only half-filled her 2008 Mazda 3 due to higher prices, which cost her between $25 and $30 each visit to the pump, and she had found opportunities to carpool with friends . These days, Ms Contreras typically takes 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.
The national average price masks strong regional variations. Prices vary depending on the health of local economies, proximity to refineries and state taxes, said AAA spokesperson Devin Gladden.
In California, for example, regulations to limit pollution are making driving more expensive, with the average gas price now at $5.38 a gallon in the state, with some counties seeing averages well above $6. . In Georgia, where gasoline taxes are lower and near refineries, the average price of a gallon of gasoline statewide is around $3.55.
But generally speaking, the general decline in gasoline prices reflects a number of factors: weaker demand, as high costs have kept some motorists off the roads; a sharp drop in world oil prices in recent months; and the fact that a handful of states have suspended gasoline taxes. On Thursday, the group of oil producing countries known as OPEC revised down its forecast for oil demand this year.
Whatever the causes, the lower prices are a welcome change for drivers for whom the added expense — often $10 to $15 more for a tank of gas — had become another hurdle as they sought to regain a normal life as the coronavirus pandemic eases.
“The pressure on affordability becomes very real when you see these high prices at the gas pump,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “So in that sense, it’s definitely a positive sign for those people who are struggling.”
This cushion – the money not spent on gasoline that can go elsewhere – also extends to businesses, especially when the price of diesel fuel drops. Diesel, which is used to power, for example, farm equipment, construction machinery and long-haul trucks, also fell from June’s record, but at a slower pace than gasoline prices .
Lower gasoline prices are also good news for the economy, as businesses are under less pressure to pass on energy costs to their customers, which would add to the country’s inflation problem.
The government announced this week that consumer price inflation slowed in July to a still high annual rate of 8.5% from 9.1% in June, largely due to lower oil prices. ‘essence. If it persists, the slowdown in inflation could allow the Federal Reserve to ease its interest rate hike campaign.
Even as they watch prices plummet, some are wondering if this is a temporary reversal.
“I’m not ready for it to go a little higher and then fight here to fill it up,” said Christina Beliard, a 27-year-old fashion influencer in Bridgeport, Connecticut.
Ms. Beliard bought a Jeep Wrangler last year but now regrets the purchase because the vehicle isn’t as fuel efficient as the Toyota Camry she used to drive. For work, she sometimes has to drive to her accounts on TikTok and Instagram, platforms on which she promotes brands, and to attend events in New York, about 60 miles from her home.
Connecticut is one of the states that suspended its gas tax until November. And Ms. Beliard, who used to spend $95 to $100 a week to fill up her Jeep, is now paying $74 to $80. Yet she is tired of the high tab.
“I’m trying to figure out, how long is this going to last?” ” she says.
This is a difficult question to answer. More than half of the cost of gasoline at the pump is determined by global oil prices, and these are volatile and subject to a myriad of forces, many of which are difficult to predict.
Oil prices fell to their lowest point since the start of the war in Ukraine in February, a drop that reflects growing concern that a global recession will hit demand for crude. Prices could rise again for several reasons: the tide of war could further hamper global oil supplies, energy investors’ views on the economy could change, or hurricanes later this year could damage refineries and pipelines. from the Gulf Coast, choking off the supply.
For now, however, the steady decline is providing respite for Americans worried about their finances as the economy slows.
“If gasoline prices stay at or near the levels they’ve been at, that would mean a lot more cushion for households,” Ms Bovino said.