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Gas Prices Are Down Nearly 40 Cents in a Year — and They Could Keep Falling
By Pete Grieve MONEY RESEARCH COLLECTIVE
Crude oil prices are on the downswing, and that’s making it cheaper to fuel up at gas stations.
Gas prices have trended lower in recent weeks, and while several shifting factors could affect the outlook, experts forecast the national average is likely to continue declining.
The average price for a gallon of gas has eased to $3.44, which is 5.6 cents lower than a month ago and 37.2 cents cheaper than it was at this time last year, according to the gas price-tracking app GasBuddy.
Above all else, gas prices are influenced by the cost of crude oil. Oil was trading at the lowest level in six months on Tuesday, according to the West Texas Intermediate measure, a benchmark used widely by analysts.
Weaker oil prices have allowed gas prices to fall. After a brutal start of the week for the stock market, increased concern about an economic slowdown has led to lower expectations for global oil demand and the current price per barrel of around $73 is now 10% lower than a month ago.
“With oil prices plummeting due to new concerns over the U.S. economy after a poor jobs report, gasoline prices have seen downside in many states, with potential for more to join that trend this week,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a report Monday.
Why gas prices are falling
Gas prices tend to move by about 25 cents with a $10 swing in the price of oil, so any additional movement lower could allow pump prices to keep falling.
On Wednesday, GasBuddy reported that U.S. oil production reached an all-time high, at the same time demand was slightly lower compared to the same time a year ago. It’s a situation that will likely continue to nudge gas prices downward.
On the other hand, it’s possible that oil prices could creep back up, which would likely upend forecasts for lower gas prices. Experts say that escalating conflict in the Middle East could disrupt oil markets, as prices would likely rise if oil supply from the region drops.
In a forecast Monday, the Energy Information Administration (EIA) said lower oil prices may not last, citing production cuts from Saudi Arabia and other oil-producing countries in the OPEC+ group. But the EIA is still encouraged about where gas prices are headed.
“Even though we expect oil prices to increase, we expect gasoline prices through this year and next year to remain lower than they were in 2023,” EIA Administrator Joe DeCarolis said in a release. “U.S. motorists are using less gasoline than they did before the pandemic, and we expect that to help keep gasoline prices from climbing with oil prices.”
Seasonal trends will influence gas prices in the coming weeks and months. Prices typically decline in the fall as the summer driving season winds down around Labor Day. The drop in fuel demand coincides with an annual transition from summer-grade gasoline to a cheaper winter blend, which brings additional relief for drivers.
With that said, hurricane season is ongoing, and one bad storm impacting refinery operations could cause prices to soar.
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Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.