what is happening
Gas prices have continued to decline since reaching an all-time average high of $5.02 in mid-June
Why is that important?
Gas prices are still $1.72 a gallon higher than just a year ago, and many motorists are feeling the pinch.
Gas prices continued to decline in the US for the second week in a row. On Friday, the national average for a gallon was $4.84, according to AAA. That’s 9 cents cheaper than a week ago and 18 cents cheaper than the all-time high of $5.02 a gallon, which was reached the week of June 13.
Part of that is due to a drop in demand: While total domestic gasoline stocks rose by 2.6 trillion barrels to 221.6 barrels, Americans are using about 8.9 million barrels of gasoline per day, compared with 9.11 million at the end of June 2021.
That imbalance means drivers will continue to look for relief at the pump, AAA said.
To help, Sheetz dropped the price on Unleaded 88 to $3.99 through the Fourth of July at more than 650 locations in Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina. The mid-Atlantic convenience store chain is cutting the price of E85 gas to $3.49, though the high-ethanol blend isn’t compatible with all vehicles.
Here’s what you need to know, including how high gasoline prices could go, what the White House is doing to turn it around, and how you can save money when you fill up.
Which states have seen the biggest drop in gas prices?
Between June 23 and June 30, AAA reported, the states with the largest declines in gas prices were Wisconsin (−14 cents), Delaware (-14 cents), Indiana (-13 cents), Florida (-13 cents), Ohio (-13 cents), Arizona (-12 cents), Texas (-12 cents), Michigan (-12 cents), South Carolina (-11 cents) and Maryland (-11 cents).
South Carolina actually has the second cheapest gas in the country behind Georgia, with lead averaging $4.36 per gallon.
It is worth noting that none of these statesDuring this period. Florida’s one-month fuel-tax holiday, which will lower gas prices by 25.3 cents a gallon, doesn’t take effect until Oct. 1.
You can see the average price of gas in all 50 states and the District of Columbia on the AAA Gas Prices website
Why is gas so expensive?
Russia is underwayAn obvious point. The price of gas is inextricably linked to the price of crude oil from which it is refined. Every $10 increase in the price of a barrel of crude oil adds about 25 cents to the price of a gallon of gas.
According to the White House, the war raised gasoline prices to more than $1.70 per gallon.
Even though the US does not import much crude oil from Russia, oil is traded on the global market and any change affects prices around the world.
Foreign Policy reports that crude oil prices could reach $150 a barrel by the fall. And, according to new data from the Energy Information Administration, the total domestic supply of gasoline is falling: It fell 700,000 barrels to 217.5 trillion in the week of July 13.
But the Russian offensive is not the only factor: Although demand is approaching pre-pandemic levels, producers are still shy about ramping up production. In April, OPEC fell short of its target production increase of 2.7 million barrels per day.
“We’ve had a supply and demand imbalance for quite some time,” Troy Vincent, senior market analyst at energy analysis firm DTN, told CNET. “And regardless of whether this conflict goes away, it will remain.”
President Joe Biden has accused oil companies of profiting from the crisis.
“In the midst of a war that has pushed gasoline prices above $1.70 per gallon, historically high refinery margins are exacerbating that pain,” Biden wrote in a June 15 letter to the heads of ExxonMobil, Chevron, Shell, Phillips 66, BP and other companies. .
“I understand that many factors contributed to business decisions to reduce refinery capacity that occurred before I took over,” he said. “But during wartime, it was unacceptable for refinery profits to be passed directly to American families above normal.”
In addition, during the summer months, gasoline is reformulated to prevent excess evaporation caused by high outside temperatures. A more expensive summer blend of gasoline can add between 7 and 10 cents per gallon.
How high can gas prices go?
During the week of June 13, gas hit an average of $5.02 a gallon — a record dollar amount but, adjusted for inflation, still below the 2008 peak of $4.14, which is now around $5.37. Still, experts don’t believe we’ve seen the end of rising gas prices.
Analysts predict prices at the pump will rise again. According to University of Houston economist Ed Hirs, the national average hits $6 a gallon on Labor Day.
Natasha Kaneva, head of commodities research at JPMorgan, is even more pessimistic: In a May report, Kaneva said prices could jump to $6.20 a gallon by early August, Insider reported.
What is the government doing to reduce gas prices?
In June, President Biden approved a three-month nationwide gas tax holiday. Separately, Connecticut, Maryland, New York, Florida and GeorgiaAnd at least 20 other states are considering similar measures.
In a June 15 letter, Biden called on oil companies to work with his administration to resolve any cuts in production and “inventory, pricing and refining capacity issues.”
He was criticized for previously approving 12 million acres of federal land for drilling and 9,000 production permits. The administration has suggested that oil companies pay fines for not using contracts.
In April, the Environmental Protection Agency approved year-round sales of E15 gasoline, a cheaper, higher-ethanol fuel. The effect is modest, as only 2,500 of the more than 100,000 gas stations nationwide sell the blend.
In March, the White House began releasing one million barrels of oil per day from the US Strategic Petroleum Reserve. The unprecedented withdrawal, expected for six months, could lower gasoline prices by between 10 and 35 cents a gallon.
“It will lower oil prices a bit and stimulate more demand. But it’s still a Band-Aid on a significant supply shortfall,” Scott Sheffield, chief executive of Texas oil company Pioneer Natural Resources, told The New York Times.
The US is also looking at getting energy products from other sources: the Biden administration is improving diplomatic ties with Venezuela, which has been banned from selling oil to the US since 2018, and is negotiating another nuclear non-proliferation agreement with Iran, which could bring Iran Oil is back on the market.
How can drivers save at the pump?
Drivers can cut back on non-essential trips and shop around for the best prices, crossing state lines if convenient.
Apps are like thatScan for the best gas prices in your area. Others, like , track your car’s gas mileage and help determine if it’s getting decent fuel economy. In addition, many gas station chains have loyalty programs, and It offers cash back on gas purchases.
DTN’s Vincent advises against gas hoarding or other extreme measures but encourages more budgeting for gas. High fuel prices have been a major contributor to inflation for some time and will not go away immediately, he said.
“When crude prices rise, prices at the pump reflect that very quickly,” he said. “But even when crude oil falls, gas prices will remain high.”