US gas prices fell below $4 a gallon on Thursday, the lowest level since March.
According to AAA, the national average cost of a gallon of regular gasoline is now $3.99. This is higher than he was a year ago, but is still well below his mid-June peak near $5.02. The drop is good news for policy makers struggling to keep prices from rising, as energy costs affect a wide range of inflation indicators, and for President Biden, who has pledged to keep prices down. Gas Fee.
National averages include a wide range of prices, from about $5 per gallon in Oregon and Nevada to about $3.50 per gallon in Texas and Oklahoma. But broadly speaking, this decline reflects many factors. The sharp drop in world oil prices in recent months. And the fact that several states have suspended gas taxes.
Whatever the cause, the price cuts are a welcome change for drivers looking to get back to normal life after the COVID-19 pandemic. .
“New diseases and inflation are on the rise and people are expecting a recession,” said Jindi Contreras, a student and part-time waitress in Los Angeles, where gas prices are close to $5.40 a gallon. . “If he didn’t have to worry about a gas tank costing him $70, it would be a relief.”
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Contreras only used half to fill up his 2008 Mazda 3. This was a result of the price increase, costing him $25 to $30 every time he went to the gas station. She found an opportunity to carpool with her friend. These days, Ms. Contreras typically says she fills up with gas twice a week, uses 15 miles (15 miles) to commute each week, and depending on her plans she does 10 to 50 miles (10 to 50 miles) a week. miles).
“When you look at these high prices on gas pumps, the pressure on affordability becomes very real,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “In that sense, this is certainly a positive sign for those who are struggling.”
That cushion — cash not spent on gasoline — is extended to businesses, especially as diesel fuel prices also drop. Diesel, which is used as a fuel for agricultural machinery, construction equipment and long haul trucks, has also fallen from its June record, albeit at a slower pace than gasoline prices.
Falling gas prices are also good news for the economy. This is because businesses face less pressure to pass on energy costs to their customers. The move will add to the country’s inflation problem.
The government reported this week that consumer price inflation eased to 8.5% in July from 9.1% in June, largely thanks to lower gasoline prices. If it continues, slowing inflation could allow the Federal Reserve to ease its campaign to raise interest rates.
Biden has been touting lower gas prices in recent weeks, but says he plans to do more to bring costs down. This year it released some of its oil reserves to prevent prices from rising sharply.
“We will continue to do everything we can to bring the price of petrol at the pump down,” he said. briefing Late July.
When economists and consumers see prices fall, they wonder if this is a temporary reversal.
Christina Belliard, 27, a fashion influencer from Bridgeport, Connecticut, said:
Berryard bought a Jeep Wrangler last year, but regrets the purchase because it doesn’t get as fuel-efficient a Toyota Camry he used to drive. My job requires me to drive to the location of my TikTok and Instagram accounts, to the platforms that promote my brand, and to attend New York City events about 60 miles away from my home.
Connecticut is one of several states that has suspended gas taxes through November. Belliard said he used to spend $95 to $100 a week to fuel his Jeep, but now he’s paying $74 to $80. Still, she’s tired of the high tab.
“I’m trying to figure out, how long is this going to last?” she said.
That’s a difficult question to answer. More than half of the cost of gasoline at the pump is determined by world oil prices. They are subject to myriad forces that are variable and difficult to predict.
Oil prices have fallen to their lowest level since war began in Ukraine in February, reflecting growing fears of a global recession hurting oil demand, but prices could rise again. There are several reasons why. The course of the war could further impede global oil supplies, energy investors’ view of the economy could change, and hurricanes could damage Gulf refineries and pipelines later this year to supply supplies. It is possible to suffocate the
For now, though, this steady decline is giving respite to Americans worried about their finances as the economy slows.
“If gas prices stay at or near current levels, there will be a bigger cushion for households,” Mr. Bovino said.