U.S. gas prices fell below $4 a gallon on Thursday, falling to their lowest level since March, a drop that brought relief to Americans grappling with the rising cost of everything from groceries to rent.
The national average cost per gallon of regular gasoline is $3.99, according to the AAA. This is higher than a year ago but still well below the peak of around $5.02 in mid-June. Energy costs are fueling broad measures of inflation, so the decline is also good news for policymakers who have struggled to contain price increases and for President Biden, who has pledged to cut prices. gas costs.
The national average includes a wide range of prices, from about $5 a gallon in Oregon and Nevada to about $3.50 in Texas and Oklahoma. But, in general, the decline reflects a number of factors: weak demand, because high costs have retained some Drivers on the road; a sharp decline in world oil prices in recent months; And the fact that a handful of states have suspended taxes on gasoline.
Whatever the reasons, the lower prices are a welcome change for drivers whose extra expenses – often an extra $10 to $15 for a gas tank – have become another hurdle as they seek to get their lives back to normal after the coronavirus pandemic. .
“We have new diseases rising and inflation, and people are expecting a recession,” said Zindy Contreras, a student and part-time waitress in Los Angeles, where gas prices are near $5.40 a gallon. “If I had to not worry about consuming my $70 gas tank, it would be a huge relief, for once.”
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Ms. Contreras was filling her 2008 Mazda 3 only halfway as a result of the price hikes, which cost her $25-30 per visit to the pump, and she’s found opportunities to gather in the car with friends. These days, Ms. Contreras usually gets gasoline 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 affordability pressure becomes very real when you see these higher prices at the gas pump,” said Beth Ann Bovino, chief US economist at S&P Global. “So, in that sense, it’s definitely a positive sign for those people who are struggling.”
That cushion—money that wasn’t spent on gasoline that could go elsewhere—is extending to businesses, too, especially at the price of diesel falls too. Diesel, which is used in fuels, for example, agricultural equipment, construction machinery and long-distance trucks, also fell from a record low in June, albeit at a slower pace than gasoline prices.
The gas price drop is also good news for the economy, as companies face less pressure to pass on energy costs to their customers – a move that will add to the country’s inflation problem.
The government reported this week that consumer price inflation slowed down in july to an annual rate of 8.5 percent, down from 9.1 percent in June, thanks in large part to lower gasoline prices. If it continues, the slowdown in inflation could allow the Federal Reserve to ease its campaign to raise interest rates.
And it would be somewhat of a victory for Biden, who has spent the last weeks Overlooking the drop in gasoline pricesEven he says he expects to do more to cut costs. Mr. Biden criticized the oil companies for what they have Record profits from the rise in oil Gas prices, and this year have released some of the country’s oil stocks in an attempt to prevent prices from jumping too quickly.
“I will continue to do what I can to lower the price of gas at the pump,” he said. instructions in late July.
Even as they watch prices fall, economists and consumers say they wonder if this is a temporary reversal.
“I’m not ready to rise a bit again and then here I am struggling to fill my closet,” said Christina Billiard, a 27-year-old fashion influencer in Bridgeport, Connecticut.
Ms. Billiard bought a Jeep Wrangler last year but now regrets buying it because the car is not as fuel-efficient as the Toyota Camry she drove before. To work, she sometimes needs to drive to her TikTok and Instagram account locations, the platforms through which she promotes brands, and to attend events in New York City, which is about 60 miles from her home.
Connecticut is one of the states that has suspended its gasoline taxes until November. And Mrs. Billiard, who used to spend $95 to $100 a week fitting her Jeep, is now paying $74 to $80. However, she is tired of the high tab.
“I’m trying to figure out, how long will this last?” She said.
This is a difficult question to answer. More than half The cost of gasoline at the pump They are determined by world oil prices, are volatile and subject to myriad forces, many of which are difficult to predict.
Oil prices have fallen to their lowest level since the start of the war in Ukraine in February, a drop that reflects growing concern about a global recession that will hurt demand for crude. There are several reasons for prices to rise again: the course of the war could further impede global oil supplies, and energy investors’ opinions about the economy could change and Hurricanes later this year It could damage Gulf Coast refineries and pipelines, throttling supplies.
For now, though, the steady decline is providing respite for Americans worried about their finances as the economy slows.
“If gasoline prices remain at or near the levels they reached, this will mean more protection for households,” Bovino said.
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