The price of gas has dropped by more than a penny a day for a month. According to AAA, the average nationwide price of a gallon of gas this morning is $3.45.
That’s 9 cents lower than it was the day Russia invaded Ukraine, triggering a global oil price crisis.
Experts say the decline is nowhere near finished. Patrick De Haan, head of petroleum analysis for the price tracking service Gas Buddy, wrote this week that “It’s entirely possible the national average price of gasoline could fall under $3 per gallon by Christmas, which would be a huge gift to unwrap for motorists after a dizzying year at the pump.”
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Regional differences remain. Texas has America’s cheapest gas, at $2.82 today. California has its most expensive, at $4.86. But, while the West Coast still has the highest average price in the nation, the Wall Street Journal notes, “the region has seen some of the biggest declines in prices in recent weeks.”
Some Reasons are Local; Some Global
Several factors are driving the decline. Some of them are positive and things Americans can control. Others are global forces out of our hands or not entirely good news.
According to the U.S. Energy Information Administration, total nationwide gasoline stocks are rising.
That’s happening because demand is lower. Americans burned through 8.3 million barrels of gasoline in the week ending Nov. 25 (the most recent week for which data is available). A year earlier, we used 8.8 million that same week.
AAA thinks demand will remain low and predicts that “drivers will likely continue to see pump prices decrease through next week.”
But global forces are at least as powerful as American demand in setting gas prices.
In a research note, Capital Economics economist Edward Gardner warns, “With China now battling its most widespread Covid-19 outbreak since the start of the pandemic, the country and its economy face a dire few weeks. As a result, China’s demand for oil will come under pressure.”
Meanwhile, the Washington Post explains, “The United States and Europe are negotiating a price cap on Russian oil, to take effect Monday.” If the cap is too low, analysts worry that “Moscow could retaliate by cutting off its supply, creating a surge in prices globally.”
Government May Fill Up; You Might Want To Wait a Week
But, for now, analysts think the price drops will continue. That could drive policy decisions and pocketbook decisions. Bloomberg reports, “The Biden administration is seeking to stop sales from the Strategic Petroleum Reserve mandated by Congress so it can refill the emergency reserve” while prices are low.
You, ironically, might not want to refill your supply just yet.
“I think, for now, we definitely should see a continued big drop in prices, so don’t be in a hurry to fill your tank,” says De Haan.
