First time since March, U.S. gas prices dip below $4, (Reuters) Average U.S. retail gasoline prices fell below $4 per gallon on Thursday for the first time in months, providing drivers some comfort.
According to the American Automobile Association, regular unleaded gas cost $3.990 a gallon on Thursday.
Gasoline prices peaked at $5.02 in June, hurting finances and causing drivers to buy less fuel in July than during the 2020 epidemic.
The recent price cut may aid President Biden and Democrats in November’s midterms. After Russia invaded Ukraine, the White House took steps to lower oil costs. Biden said inflation is reducing, but people are “still struggling.”
Crude oil, the key driver of gasoline costs, reached $139 a barrel; it’s $98 today. As supply fears abate, prices fall.
The White House is releasing 180 million barrels of oil from the SPR. U.S. oil production is up 500,000 BPD to 12.2 million BPD this year.
EIA data shows that gasoline product supplied, a proxy for demand, is 6.3% lower than a year earlier. Recent data showed demand increasing from July, which analysts anticipated meant the price drop would revive demand. For the four weeks ended July 29, gasoline supplies were 8.59 million BPD, compared to 8.72 million BPD in July 2020.
“When petrol prices break below $4 on the national average, hopefully, demand destruction is temporary and in the rearview mirror,” said Kepler’s Matt Smith.
Consumers interviewed recently said they were delighted to see costs fall but were wary about purchases. Kevin Williams, a Postal Service worker in Atlanta on Wednesday, said gas prices are falling but not fast enough. “Even with lower prices, filling up costs $50-$60. $30 once.”
With job growth continuing strong, demand could rebound with cheaper costs. Last week, refining executives were hopeful about 2022 consumption.
Gasoline futures are down 27% from June highs; retail is down 20%. Ohio prices are 27% lower than their high.
Gas prices soar in summer and fall when the driving season ends.
The SPR release, in cooperation with IEA releases, cut gasoline prices by 17 cents to 42 cents per gallon, the U.S. Treasury Department stated in July, though the true impact was hard to quantify.
Low pricing aid low-income Americans. Bank of America reports that lower-income families’ gasoline spending as a share of credit card spending declined to 9.3% in July from 10% in June.
Last month, U.S. consumer inflation forecasts decreased substantially. The significant drop in energy prices held down consumer inflation in July, but it’s still 8.5% higher than a year earlier.
Kelly Ferrel, a saleswoman in Atlanta, said she wanted to fill up while gas prices were low. I wish they’d lower prices.
Goldman Sachs analysts predict crude could rise later this year since the recent surge “didn’t destroy enough demand to close the current gap.”