Gas prices on Thursday were slightly less on average than they did one year ago — a slim one-cent difference — but experts say there may be even cheaper gas in the weeks and month to come.
Thursday’s national average for a gallon of gas was approximately $3.33, AAA said. That’s down from $3.34 this time last year, and significantly lower than the record high of $5.01 recorded in mid-June.
Six months after drivers were snapping photos of high prices at the pump, gasoline-industry experts say the downward trend is due to a combination of falling crude-oil prices and a drop in driver demand after traditionally busy summer months.
“We expect gas prices likely are going to continue trending lower,” said AAA spokesman Devin Gladden. It’s possible the national average will fall below the $3-per-gallon mark, but when that happens and for how long is unclear, he added.
The key question is where crude-oil prices go, he said. Crude-oil costs account for just over 50% of the price in a gallon of gas, the single largest contribution to the price, according to the U.S. Energy Information Administration.
Oil markets are weighing a lot of open questions, Gladden said. That includes the future of American consumer demand, the impact of $60 price caps on Russian seaborne oil and China’s demand, Gladden said.
West Texas Intermediate crude for January delivery was up 87 cents, or 1.2%, to trade at $72.88, making some gains after oil prices touched the lowest point in nearly a year.
But there are no guarantees gas prices will continue to fall. “There’s still a lot of unanswered questions that could send oil prices higher,” Gladden said. “The message is the oil market remains highly, highly volatile,”
“‘We are trending lower. Do we get to $2.99? Nationally, I think we have a shot at it.’”
“We are trending lower. Do we get to $2.99? Nationally, I think we have a shot at it,” said Denton Cinquegrana, chief oil analyst at Oil Price Information Service. (OPIS, an energy industry data and news provider, is owned by Dow Jones.)
It’s unlikely to happen in December, he said. But by January, the chance at a point below the $3 average brightens as demand typically wanes after the busy holiday season when people often have less energy — and money — to travel.
National averages, however, also mask regional price differences. Along the west coast, AAA data shows average prices exceed $4 per gallon while many states in the south have prices have already fallen below the $3 mark.
In the heart of the price shock, research and anecdotal evidence indicated people were driving less to conserve gas and cash. One AAA survey last summer said nearly two-thirds of drivers changed their habits, and the top tactic was driving less.
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In a roughly two-month stretch, aggregate volume at gas stations is down 4% to 6% year-over-year, Cinquegrana said. That might be a reflection of less driving, but it also might also be due to more fuel-efficient cars on the road, he added.
Next Tuesday, the Bureau of Labor Statistics will release November inflation data. During October, overall inflation rose 7.7% on an annual basis. For comparison, inflation increased 6.2% on a yearly basis in October 2021.
As gas prices slide, so are diesel fuel costs — albeit to a lesser extent, Gladden noted. That matters because diesel is often the main fuel that semi-trailer trucks use as they haul consumer goods interstate from warehouses to stores.
On Thursday, diesel fuel was an average $5 and it was $3.61 a year ago, Gladden noted. “Demand remains very robust, unlike gasoline,” he said. High fuel costs will ultimately seep into the costs that get passed to consumers, he added.
Gas prices aside, some Americans are already under a great deal of financial pressure. One quarter of parents told Pew Research Center pollsters they didn’t have enough money for food or rent/mortgage at least once in the past 12 months.
Lower-income families typically spend a larger portion of their income on essentials like food and housing. More than half of households making less than $43,800 a year said there were times when they struggled to pay for food or shelter.
“Some relief has been seen from the peaks of inflation, particularly with hugely consequential gasoline prices,” Mark Hamrick, senior economic analyst
at personal-finance site Bankrate.com, told MarketWatch.
“Whatever the forthcoming November report on inflation at the retail level looks like, it is not going to sound an all-clear on high prices,” he said, adding, “The inflation fever is breaking, but it hasn’t gone away.”