NEW YORK — Gas prices are once again on the decline across the U.S., bringing some relief to drivers now paying a little less to fill up their tanks.
The national average for gas prices on Monday stood around $3.44, according to AAA. That’s down about 9 cents from a week ago — marking the largest one-week drop recorded by the motor club so far in 2024. Monday’s average was also more than 19 cents less than it was a month ago and over 14 cents below the level seen this time last year.
Why the recent fall in prices at the pump? Industry analysts point to a blend of lackluster demand and strong supply — as well as relatively mild oil prices worldwide.
Here’s a rundown of what you need to know.
A motorist fills up the tank of a vehicle at a gasoline pump at a Costco warehouse Friday, May 31, 2024, in Aurora, Colo. Gas prices are once again on the decline across the U.S. — bringing some ease to drivers at a time of year when it usually costs a little more to fill up your tank.
Why are gas prices falling?
There are a few factors contributing to today’s falling gas prices. For starters, fewer people may be hitting the road.
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“Demand is just kind of shallow,” AAA spokesperson Andrew Gross said, pointing to trends seen last year and potential lingering impacts of the COVID-19 pandemic. “Traditionally — pre-pandemic — after Memorial Day, demand would start to pick up in the summertime. And we just don’t see it anymore.”
Last week, data from the Energy Information Administration showed that U.S. gasoline demand slipped to about 8.94 billion barrels a day. That might still sound like a lot — but before the pandemic, consumption was closer to the 10 billion barrel-a-day range at this time of year, Gross noted.
Beyond pandemic-specific impacts, experts note that high gas prices seen following Russia’s invasion of Ukraine in 2022 and persistent inflation may have led many Americans to modify their driving habits. Other contributing factors could be the increased number of fuel-efficient cars, as well as electric vehicles, on the road today, Gross said.
Some of this is still seasonal. Patrick De Haan, head of petroleum analysis at GasBuddy, noted that gas prices typically ease in early summer because of refinery capacity. At this time of year, he said, many factors boosting prices in late winter and early spring — particularly refinery maintenance — are no longer present.
“Once refinery maintenance is done, output or utilization of the nation’s refineries goes up — and that contributes to rising supply,” De Haan said. And that stronger supply, paired with weaker consumption, has lead to a “bit more noticeable” decline in prices this year. He added that U.S. refinery utilization is at some of its highest levels since the pandemic.
Separately, the Biden administration announced last month that it would be releasing 1 million gasoline barrels, or about 42 million gallons, from a Northeast reserve with an aim of lowering prices at the pump this summer. But De Haan noted that such action has little impact nationally — 42 million gallons equals less that three hours of U.S. daily gas consumption.
“Really, what we’re seeing right now with (declining) gasoline prices … has been driven primarily by seasonal and predictable economics,” he said.
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FILE – A customer stops for fuel at a gas station in Northbrook, Ill., on April 18, 2024. Gas prices are once again on the decline across the U.S. — bringing some ease to drivers at a time of year when it usually costs a little more to fill up your tank.
What about oil prices?
Experts also point to cooling oil costs. Prices at the pump are highly dependent on crude oil, which is the main ingredient in gasoline.
West Texas Intermediate crude, the U.S. benchmark, has stayed in the mid $70s a barrel over recent weeks — closing at under $78 a barrel Monday. That’s “not a bad place for it to be,” Gross said, noting that the cost of crude typically needs to go above $80 to put more pressure on pump prices.
Oil prices can be volatile and hard to predict because they’re subject to many global forces. That includes production cuts from OPEC and allied oil producing countries, which have previously contributed to rising energy prices.
OPEC+ recently announced plans to extend three different sets of cuts totaling 5.8 million barrels a day — but the alliance also put a timetable on restoring some production, “which is likely why the price of oil had somewhat of a bearish reaction,” De Haan said.
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Motorist pass posted gas prices, Monday, June 10, 2024, in San Antonio. Gas prices are once again on the decline across the U.S., bringing some relief to drivers now paying a little less to fill up their tanks.
Could prices go back up?
The future is never promised. But, if there are no major unexpected interruptions, both Gross and De Haan say that prices could keep working their way down.
At this time of year, experts keep a particular eye out for hurricane risks — which can cause significant damage and lead refineries to power down.
“Prices move on fear,” Gross said. In the U.S., he added, concern particularly rises once a hurricane enters the Gulf of Mexico — and even if it doesn’t eventually make landfall, refineries may pull back on operations out of caution. Impacts can also range by region.
But barring the unexpected, analysts like De Haan expect the national average to stay in the range of $3.35 to $3.70 per gallon. Gas prices typically drop even more in the fall, and it’s possible that we could see the national average below $3 in late October or early November, he said.
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FILE – A car drives past Marathon Oil’s Los Angeles Refinery complex in Carson, Calif., May 29, 2024. Gas prices are once again on the decline across the U.S. — bringing some ease to drivers now paying a little less to fill up their tanks.
What states have the lowest gas prices today?
While gas prices nationwide are collectively falling, some states, of course, always have cheaper averages than others, due to factors ranging from nearby refinery supply to local fuel requirements.
As of Monday, per AAA data, Mississippi had the lowest average gas price at about $2.94 per gallon — followed by $2.95 Oklahoma and just under $2.97 in Arkansas.
Meanwhile, California, Hawaii and Washington had the highest average prices on Monday — at about $4.93, $4.75 and $4.41 per gallon, respectively.
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A station’s gas prices are displayed on a pump, Monday, June 10, 2024, in San Antonio. Gas prices are once again on the decline across the U.S., bringing some relief to drivers now paying a little less to fill up their tanks.
Americans still love buying trucks, even as gas prices rise
Americans still love buying trucks, even as gas prices rise
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Some trace the American obsession with pickup trucks back to the horse and buggy. It’s a natural evolution of our instinctual first stab at transportation. Others chalk it up to our largesse—America’s insatiable desire for bigger, shinier, newer, state-of-the-art goods.
But Americans are also known to be price-conscious—about gas prices, especially, according to Pew Research. This could be in part because our lifestyles require us to buy so much of it. In 2021, Americans bought nearly 500 gallons of gasoline for every registered vehicle in the country, according to the oil and gas trade association, the American Petroleum Institute. That puts the U.S. at the top of the list for gas consumption, with Americans using almost three times the amount of gas as China and more than 11 times the amount as Canada.
And even with gas prices sitting stubbornly at a whole dollar more on average than before the Russian invasion of Ukraine, Americans continue to buy gas-guzzling trucks and SUVs.
Americans bought more than 1 million trucks in May, accounting for more than three-quarters of all car sales, according to Motor Intelligence estimates. Of the over 40 most popular brands selling trucks, only three sold more cars in May: MINI, Dodge, and Bentley.
Insurify examined May 2023’s new car sales estimates compiled by Motor Intelligence and average gas prices from the Energy Information Administration to explore why these large vehicles have such impressive staying power in the U.S. economy today.
Automakers sold more trucks than cars in May
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It’s a love affair in which both parties have responded to each other’s desires over recent years. The 2010s saw pickup truck and SUV sales outpace sedans as the U.S. heaved itself from the wreckage of the 2008 financial crisis. The federal government pumped lifesaving money into vehicle manufacturers like General Motors, and larger vehicles became profit leaders as sales picked up.
For fuel emission standards, Environmental Protection Agency defines a light-duty truck as a motor vehicle weighing 8,500 pounds or less primarily designed to transport property, including pickups, SUVs, and vans.
According to Federal Reserve data, overall vehicle sales hit a modern-day peak back in spring 2021 alongside the distribution of COVID-19 vaccines and the easing of restrictions on businesses.
And as Americans have bought more large vehicles, manufacturers are shifting production to match demand. In 2018, for example, Ford announced plans to end production of sedans except for its Mustang line, opting instead to double down on trucks and SUVs. GM has made similar modifications to its lineup.
Gas prices drop but remain elevated
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Gas prices are lower than a year ago but remain well above the norms Americans may remember from before the pandemic. Drivers would be hard-pressed today to find $2 gasoline without the help of discounts.
The abnormal spike in the summer of 2022 resulted from a sudden global shift in how the world supplies oil and gas to consumers.
Russia is one of the largest suppliers of oil in the world. When it began bombing Ukrainian cities, several nations worldwide, including the U.S., scrambled to find alternative places to purchase oil. Russia’s invasion of the former satellite state kicked off an economic war as much as it fired up a proxy fight with Western democracies.
This year, the gas price has dropped to nearly $3 per gallon from a historic high of almost $5 per gallon. Oil producers in the U.S. have kicked up production in response to the turmoil, but not until after hauling in record profits thanks to high demand and low oil supply for months.
American drivers have been dealt a relative break as the summer bears down on them. But it may be unrealistic to expect a return to the sub-$3 a gallon gas from pre-pandemic times.
Why Americans are choosing trucks
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So why are Americans still leaping for the most oversized vehicles on the market, knowing they’ll be forking over even more money weekly for their gas budgets?
For one, they offer luxurious interiors and higher safety standards. The earliest SUVs were quite literally fully enclosed bodies attached to pickup truck chassis reimagined with extended cabs and seating space. Today they boast some of the roomiest and plushest interiors on the market, next to the often overlooked minivan.
And today’s pickup trucks have been updated, too. A modern Ford F-150, for example, now requires many computer chips to power its climate control, touchscreen entertainment console, automatic start and stop, and other high-tech features. The slowdown in new vehicle production coinciding with the pandemic hit truck sales as much as sedans, emphasizing today’s trucks are not the simple, gas-guzzling workhorses of the 1990s when bench seats were still standard.
The geographic differences between states where people buy the most trucks and SUVs is another factor to consider for their staying power. Along the Gulf Coast, including the states of Texas, Louisiana, and Mississippi, gasoline is relatively cheap compared with states along the West Coast and Northeastern Seaboard, where it is more expensive.
An analysis from iSeeCars, a data-driven car search and research company, looked at data from April 2022 through March 2023 and found the states with above-average truck sales also have lower-than-average gasoline prices.
It costs money to transport gas through pipelines from oil-producing regions like Texas and Pennsylvania, and consumers in more distant states pick up the tab in increased costs at the pump. In recent weeks, Southern states have enjoyed roughly 25% lower costs per gallon of gas compared with West Coast states like California, according to AAA data.
California and Washington are examples of states where new laws meant to curb emissions may put economic pressure on owners of vehicles with lower fuel efficiency, like trucks and SUVs.
And even considering variable gas costs, it’s worth considering how overall commuting behaviors have shifted in recent years as workers and employers nationwide embrace remote and hybrid work schedules, allowing some people to drive less on a daily basis.
Story editing by Jeff Inglis. Copy editing by Kristen Wegrzyn.
This story originally appeared on Insurify and was produced and distributed in partnership with Stacker Studio.
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