On Thursday, the average price of gasoline in the US fell below $4 per gallon for the first time in a few months. This is good news for drivers in the country that uses the most gasoline in the world.
The average price of regular unleaded gas in the United States dropped to $3.990 per gallon on Thursday, according to the American Automobile Association.
In June, gas prices hit a record high of $5.02. This hurt people’s wallets and made them buy less gas in July than they did in July 2020, when there was a pandemic.
The most recent price drop would help Democrats in Congress and President Joe Biden’s administration in the midterm elections in November. After Russia invaded Ukraine, the White House took a number of steps to bring down the price of oil. Biden said that inflation was beginning to slow down, even though people were “still struggling.”
Crude oil, which is the main thing that affects the price of gasoline, once hit $139 a barrel. On Thursday, it was at $98 a barrel. Since the market is less worried about severe supply shortages, prices have gone down.
The US Strategic Petroleum Reserve is letting out more than 180 million barrels of crude oil. This is being done by the White House. This year, the U.S. oil output went up by about 500,000 barrels per day to reach 12.2 million bpd (bpd).
According to data from the Energy Information Administration (EIA), the total amount of gasoline products delivered in the last four weeks has dropped by 6.3% compared to the same time last year, which is a good indicator of demand. Data from the last week showed that demand has gone up since July. Experts took this as a sign that demand will go up because prices have recently gone down. In the four weeks that ended on July 29, the supply of gasoline products was 8.59 million bpd. In July 2020, the supply will be 8.72 million bpd.
Matt Smith, the head oil analyst for the Americas at Kpler, says, “When you look at gas prices breaking below the $4 mark on a national average basis, it’s possible that any effect of demand destruction has been temporary and may even be in the past.”
Even though they were happy to see prices go down, people who had just been interviewed said they were still careful about what they bought. Kevin Williams, who works for the U.S. Postal Service and was getting gas Wednesday in Atlanta, said, “They’re going down, but not nearly enough.” “Even though gas prices have gone down, it still costs me $50 to $60 to fill up. It used to cost $30.”
Demand could go up in the coming months because prices will be lower because job growth is still strong. Last week, executives in the refining industry were optimistic about how the rest of 2022 will go for consumption.
Gasoline futures are down 27% from their highs in June, while retail sales are down just over 20%. Some states, like Ohio, where prices are 27% lower than when they were at their highest, have had more relief.
Gas prices tend to go down as the summer driving season winds down.
In July, the US Treasury Department said that the SPR release, along with releases from other members of the International Energy Agency, lowered the price of a gallon of gas by 17 cents to 42 cents, but that it was hard to know the exact effect.
The price drop has helped Americans with low incomes. Bank of America says that the percentage of a lower-income household’s total credit card spending that goes toward gasoline dropped from a high of almost 10% in June to 9.3% in July.
Last month, American consumers’ predictions of inflation for the next year and the next three years fell sharply. Even though consumer inflation was flat in July because of the big drop in energy prices, it is still 8.5% higher than it was a year ago.
Even though she only had half a tank of gas, an Atlanta saleswoman named Kelly Ferrel said, “I wanted to fill up now while the prices are good.” On Wednesday, a gallon of gas in her city cost $3.45. I wanted them to fall more.
Analysts at Goldman Sachs think that crude prices could go up later this year because the last jump “did not cause significant demand destruction to close the current gap, which is unsustainable.”