Despite the fact that gas costs usually climb at this time of year, Americans are surprised to see that gas prices are actually declining nationwide.
According to AAA, the average price of regular unleaded gas in the United States was $3.44 per gallon on Monday, which is about 9 cents less than it was a week ago. The auto club claims that’s 19 cents less than it was a month ago and 14 cents less than it was a year ago.
According to energy experts, the reason why gas prices are declining is that the demand for gasoline has decreased and oil prices have leveled off. This is an unusual combination of events for the summer, when fuel consumption often peaks as more Americans take road trips for vacations.
“Not only have gasoline prices plummeted in nearly every state in the last week, but nearly every state has also seen prices drop compared to a month ago,” Patrick De Haan, head of petroleum analysis at GasBuddy, stated. “With the declines, Americans will spend roughly $425 million less per week on gasoline than a year ago.”
Americans reduced their travel
The U.S. Energy Information Administration reports that gasoline demand decreased to around 8.94 billion barrels per day last week from 10 billion barrels needed per day at this same time last year.
According to one analyst, Americans don’t seem to be traveling as much as they once did, which may be contributing to the decline in fuel demand.
“Demand is just kind of shallow,” AAA spokesperson Andrew Gross stated. “Traditionally — pre-pandemic — after Memorial Day, demand would start to pick up in the summertime. And we just don’t see it anymore.”
Undoubtedly, Americans are finding it harder to afford goods because of sticky inflation, which is forcing many shoppers to make lifestyle adjustments.
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According to analysts, the number of drivers choosing electric or hybrid vehicles has resulted in a decrease in gas demand.
Given that oil firms are now using their summer mix of fuel, which is specially made to not evaporate as quickly in warmer temperatures, the decline in gas prices is especially noteworthy.
Because of varying state restrictions, refineries produce over 14 varieties of summer blend, which lengthens the production process and raises costs.
Other elements driving the price drop
However, there are additional considerations involved. In an effort to reduce petrol costs, the Biden administration said last month that it would release one million barrels of gasoline, or around 42 million gallons, from a stockpile in the Northeast.
Experts also mention the expenses of cooling oil. Crude oil, the primary component of gasoline, has a significant impact on pump prices. The benchmark U.S. oil, West Texas Intermediate, closed at less than $78 a barrel on Monday after remaining in the mid-$70s per barrel for several weeks. According to Gross, that’s “not a bad place for it to be.”
“This price-decline party is ramping up, and I expect additional declines ahead of July 4 for both gasoline and diesel prices,” De Haan stated.
