Gas prices have continued to decline since reaching an all-time average high of $5.02 in mid-June
Why it matters
The price of gas is still $1.69 more a gallon than just a year ago, and many motorists are feeling the pinch.
Gas prices have continued to decline in the US for the second week in a row. On Saturday, the national average for a gallon of unleaded was $4.82, according to AAA. That’s nearly 9 cents less than a week ago and 20 cents cheaper than the all-time high of $5.02 a gallon, which was reached the week of June 13.
Part of it is due to a dip in demand: While total domestic gasoline stocks increased by 2.6 trillion barrels to 221.6 trillion barrels, Americans are using about 8.9 million barrels of gasoline a day, down from 9.11 million at the end of June 2021.
That imbalance means motorists will likely continue to see relief at the pump, AAA said.
To help things along, Sheetz lowered the price on Unleaded 88 to $3.99 a gallon through the end of the Fourth of July at its more than 650 locations in Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina. The mid-Atlantic convenience store chain is also slashing the price of E85 gas to $3.49, though the high-ethanol mix is not compatible with all vehicles.
Here’s what you need to know about gasoline prices, including how high they could go, what the White House is doing to turn that around and how you can save money when you fill up your tank. For more ways you might get more money in your pocket, here are states looking at child tax credits and stimulus money in the form of tax rebates and inflation-relief checks.
What states have seen the biggest decrease in gas prices?
Between June 23 and June 30, AAA reported, the states with the biggest drop in gas prices were Wisconsin (−14 cents), Delaware (−14 cents), Indiana (−13 cents), Florida (−13 cents), Ohio (−13 cents), Arizona (−12 cents), Texas (−12 cents), Michigan (−12 cents), South Carolina (−11 cents) and Maryland (−11 cents).
South Carolina actually has the second cheapest gas in the country, after Georgia, with unleaded averaging $4.36 a gallon.
It’s worth noting that none of these states paused their state gas tax during this period. Florida’s one-month fuel-tax holiday, which will lower the price of gas by 25.3 cents a gallon, won’t take effect until Oct. 1.
You can see the average price of gas in all 50 states and the District of Columbia on the AAA Gas Prices website
Why is gas so expensive?
Russia’s ongoing invasion of Ukraine is one obvious factor. The price of gas is inextricably linked to the cost of crude oil, from which it’s refined. Every $10 increase in the cost of a barrel of crude adds almost 25 cents to the price of a gallon of gas.
According to the White House, the war has raised gasoline prices by more than $1.70 per gallon.
Even though the US doesn’t import much crude from Russia, oil is traded on a global market and any change affects prices all over the world.
Crude oil prices could reach $150 a barrel by fall, Foreign Policy reported. And, according to new data from the Energy Information Administration, the total domestic supply of gasoline is falling: The week of July 13 it dropped 700,000 barrels to 217.5 trillion.
But the Russian invasion isn’t the only factor: Even though demand is nearing pre-pandemic levels, producers are still gun-shy about increasing production. In April, OPEC fell short of its targeted production increase by 2.7 million barrels a day.
“We’ve had a supply-and-demand imbalance for a while,” Troy Vincent, a senior market analyst at energy analysis firm DTN, told CNET. “And it will remain, regardless of whether this conflict goes away.”
President Joe Biden has also accused oil companies of profiteering off the crisis.
“Amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain,” Biden wrote in a June 15 letter to heads of Exxon Mobil, Chevron, Shell, Phillips 66, BP and other companies.
“I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office,” he added. “But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable.”
In addition, in the summer months, gasoline is reformulated to prevent excess evaporation caused by higher temperatures outside. The more expensive summer blend of gasoline can add between 7 and 10 cents per gallon.
How high could gas prices go?
The week of June 13, gas hit an average of $5.02 a gallon — a record dollar amount but, adjusted for inflation, still below the 2008 peak of $4.14, which would be about $5.37 now. Still, experts don’t believe we’ve seen the end of rising gas prices.
Analysts predict prices at the pump will go up again. According to Ed Hirs, an economist at the University of Houston, the national average will likely hit $6 a gallon by Labor Day.
Natasha Kaneva, JPMorgan’s head of commodities research, is even more pessimistic: In a May report, Kaneva said the price could jump to $6.20 a gallon as early as August, Insider reported.
What is the government doing to lower gas prices?
In June, President Biden endorsed a three-month nationwide gas tax holiday. Individually, Connecticut, Maryland, New York, Florida and Georgia have already suspended state gas taxes, and at least 20 other states are considering similar moves.
In the June 15 letter, Biden called on oil companies to work with his administration to address any reductions in production as well as “inventory, price, and refining capacity issues.”
He previously criticized them for sitting on over 12 million acres of federal land approved for drilling and 9,000 production permits. The administration has indicated it wants oil companies to pay fines for letting leases go unused.
In April, the Environmental Protection Agency approved year-round sales of E15 gasoline, a cheaper, higher-ethanol fuel. The impact will be modest, as only about 2,500 of the more than 100,000 gas stations nationwide sell the blend.
In March, the White House began releasing a million barrels of oil a day from the US Strategic Petroleum Reserve. The unprecedented withdrawal, expected to last for six months, could lower gasoline prices between 10 and 35 cents a gallon.
“It will lower the oil price a little and encourage more demand. But it is still a Band-Aid on a significant shortfall of supply,” Scott Sheffield, chief executive of Texas oil company Pioneer Natural Resources, told The New York Times.
The US is also looking at getting energy products from other sources: The Biden administration has been improving diplomatic relations with Venezuela, which has been banned from selling oil to the US since 2018 and is negotiating another nuclear nonproliferation treaty with Iran, which could bring Iranian oil back onto the market.
How can drivers save at the pump?
Drivers can cut down on nonessential trips and shop around for the best price, even crossing state lines if convenient.
Apps like Gas Guru scan for the best gas prices in your region. Others, like FuelLog, track your car’s gas mileage and can help determine if it’s getting decent fuel economy. In addition, many gas station chains have loyalty programs, and credit cards have rewards programs that give cash back for gas purchases.
DTN’s Vincent advises against hoarding gas or other extreme measures but encourages budgeting more for gas. High energy prices have been a major contributor to inflation for a while, he said, and won’t be going away immediately.
“When the cost of crude rises, prices at the pump tend to reflect it very quickly,” he said. “But gas prices tend to linger higher longer even when crude falls.”