The national average for a gallon of gas has fallen below $4.50 for the first time in two months, offering a glimmer of relief for Americans weighed down by runaway inflation.
In some parts of the country, prices are even lower: There now are at least 35 states where at least one station is selling gas for less than $4 a gallon, according to the fuel-tracking app GasBuddy. The lowest price can be found in Virginia, where at least two filling stations are advertising $3.25. And a recent survey from the Oil Price Information Service finds that nearly 1 in 5 U.S. gas stations, or roughly 24,000, now charge less than $4 per gallon, CNN reported.
The shift contrasts sharply from the relentless run-up in prices rooted in the Russian invasion of Ukraine. The war disrupted energy markets, sending crude oil prices soaring and causing significant pain at the pump — which has been a main driver of decades-high inflation. Soaring diesel fuel prices, meanwhile, have hammered U.S. supply chains, eating into corporate profits.
The turnaround has stunned longtime analysts. “We see prices decline this quickly about as often as the Cubs win the World Series … maybe twice a century,” said Patrick De Haan, GasBuddy’s Chicago-based head of petroleum analysis.
Recession worries, which cool demand, are partly at play. The four-week moving average for fuel demand was 8.72 million barrels a day as of July 8, which is 5.5 percent lower than a year ago, according to the Energy Information Administration.
At the same time, gasoline, diesel and jet fuel stocks have rebounded as refineries have grown more accustomed to the recent market imbalance. Supplies of finished motor gasoline totaled 224.9 million barrels in the week ending July 8, according to the EIA, an increase of 5.8 million over the previous week.
“Markets are doing a better job of sustaining supply, though we’re not out of the woods,” De Haan said.
For President Biden, inflation has become a political millstone or “the bane of our existence,” as he described it on Jimmy Kimmel’s talk show recently. Prices rose 9.1 percent in June compared with a year earlier, the highest level in 40 years, according to the consumer price index released last week.
Another spike in gas prices could further dent Biden’s already tepid approval ratings and hurt Democrats heading into midterm elections, even though U.S. policymakers have no real influence to bring down gas prices. A recent Washington Post/Schar School poll found that 58 percent of respondents said Biden deserves blame for high gas prices.
The Biden administration has pursued various initiatives to ease pump prices ― asking Congress for a gas tax holiday, working with Group of Seven nations to place a global price cap on Russian oil, meeting with Saudi leaders, and releasing an additional million barrels per day from the nation’s strategic reserves ― but economists note that those costs are mostly tethered to supply and demand.
“There is not much any administration can do to bring prices down, because the main driver of this is oil and it’s a global commodity,” said AAA spokesman Andrew Gross. “You can’t order someone to pump more oil. … It just doesn’t work that way.”
Energy markets have been anticipating a possible recession in the United States, Europe or both, which would sharply reduce demand for oil. The continuation of strict coronavirus lockdowns in China, the world’s second-largest oil consumer, only adds to the uncertainty.
West Texas Intermediate crude, the U.S. benchmark, briefly fell below $96 per barrel last week; by comparison, it briefly crossed $130 in the early weeks of the Russian war. On Tuesday it stood close to $100 per barrel, suggesting fuel prices have stayed low for long enough to significantly pull down gas prices.
Falling gas prices are most profound in Texas, Louisiana, Oklahoma and the Southeast, which benefit from their proximity to Gulf Coast refineries. Statewide averages stood within a cent of $4 per gallon in both South Carolina and Texas, according to AAA.
Still, fuel prices are still sharply elevated from last year, when the national average was $3.17. Analysts believe another painful spike in gas prices could emerge as soon as October in line with a fresh package of strict sanctions on Russia, which will further choke the global supply of oil. JPMorgan has warned that in a worst-case scenario, in which Russia retaliates by severing its supply to the rest of the world, the price of oil could jump as high as $380 per barrel, more than triple its current level.
“As it stands, there is no sign from either Moscow or Kyiv that they are open to a negotiated settlement,” Pavel Molchanov, director and equity research analyst at Raymond James, said in an email.
“This means, sadly, that fighting is set to continue for many more months — and, as a result, sanctions (on the part of governments) and divestments (on the part of energy companies) will continue to escalate,” Molchanov said.