U.S. gas prices fell below $4 a gallon on Thursday, falling back to their lowest level since March, a drop that has eased Americans struggling with the soaring cost of everything from groceries to for rent
The national average cost of a gallon of regular gas is now $3.99, according to AAA. That’s higher than a year ago, but still well below a high of nearly $5.02 in mid-June. Energy costs feed into broad measures of inflation, so the drop is also good news for policymakers who have struggled to contain price increases and for President Biden, who has pledged to reduce gas costs
The national average includes a wide range of prices, from nearly $5 a gallon in Oregon and Nevada to about $3.50 in Texas and Oklahoma. But broadly, the decline reflects a number of factors: weaker demand, because high costs have kept some drivers off the roads; a sharp drop in world oil prices in recent months; and the fact that a handful of states have suspended gasoline taxes.
Regardless of the causes, the lower prices are a welcome change for drivers for whom the extra expense — often an extra $10 to $15 for a tank of gas — had become another obstacle as they tried to return to their life back to normal after the coronavirus pandemic. .
“We have new diseases and rising inflation, and people are expecting a recession,” said Zindy Contreras, a student and part-time waitress in Los Angeles, where gas prices are nearing $5.40 a gallon. “If I just didn’t have to worry about my gas tank taking up $70, that would be a huge relief, for once.”
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Ms. Contreras has been filling her 2008 Mazda 3 only half full because of higher prices, costing her $25 to $30 each pump visit, and had found opportunities to carpool with friends. These days, Ms. Contreras usually gets gas twice a week, driving 15 miles to work each week and an additional 10 to 50 miles a week, depending on her plans.
“The affordability constraint is becoming very real when you see these high prices at the gas pump,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “So in that sense, it’s definitely a positive sign for those people who are struggling.”
That cushion (cash not spent on gas that can go elsewhere) also extends to businesses, especially as the price of diesel also falls. Diesel, which is used to power, for example, farm machinery, construction machinery and long-haul trucks, has also fallen from June’s record, although at a slower pace than gasoline prices.
Falling gas prices are also good news for the economy, as companies face less pressure to pass on energy costs to their customers, a move that would add to the country’s inflation problem.
The government reported this week that consumer price inflation slowed in July to an annual rate of 8.5 percent, down from 9.1 percent in June, thanks largely to falling prices of gasoline If it persists, the slowdown in inflation could allow the Federal Reserve to ease its campaign to raise interest rates.
It would also serve as a victory of sorts for Mr. Biden, who has spent the past few weeks touting falling gas prices even as he says he hopes to do more to cut costs. Mr. Biden has criticized oil companies for their record profits from high oil and gas prices, and this year dumped some of the nation’s oil stockpile in an effort to prevent prices from jumping too quickly.
“I will continue to do what I can to lower the price of gas at the pump,” he said at a briefing in late July.
Even as they watch prices fall, economists and consumers say they wonder if this is a temporary reversal.
“I’m not ready for it to go up a little bit more and then I’m here struggling to fill the tank,” said Christina Beliard, a 27-year-old fashion influencer in Bridgeport, Connecticut.
Mrs. Beliard bought a Jeep Wrangler last year, but now regrets the purchase because the vehicle is not as fuel efficient as the Toyota Camry she used to drive. For work, he sometimes needs to drive to the locations of his accounts on TikTok and Instagram, platforms where he promotes brands, and to events in New York City, which is about 60 miles from his home.
Connecticut is one of the states that suspended the gas tax until November. And Ms. Beliard, who had been spending $95 to $100 a week to fuel her Jeep, now pays $74 to $80. Still, she’s tired of the high brow.
“I’m trying to figure out, how long is this going to take?” she said
It’s a difficult question to answer. More than half of the cost of gasoline at the pump is determined by global oil prices, and these are volatile and subject to a myriad of forces, many of which are difficult to predict.
Oil prices have fallen to their lowest point since the war in Ukraine began in February, a decline that reflects growing concerns that a global recession will hit demand for crude. There are several reasons why prices could rise again: the course of the war could further strain global oil supplies, energy investors’ views on the economy could change, and hurricanes later this year could damaging Gulf Coast refineries and pipelines, suffocating supplies.
For now, though, the steady decline offers relief to Americans worried about their finances as the economy slows.
“If gas prices stay at or near the levels they’ve reached, that would mean a lot more cushion for households,” said Ms. Cattle.