After peaking in mid-June, they have tracked a global decline in oil prices and are back where they were in March.
Gas prices in the United States fell below $4 a gallon on Thursday, retreating to their lowest level since March, a drop that has brought relief to Americans struggling with the skyrocketing cost of everything from groceries to rent.
The national average cost of a gallon of regular gasoline now stands at $3.99, according to AAA, after 58 consecutive daily declines. That’s higher than it was a year ago but still well below a peak 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 the price increases and for President Biden, who has pledged to lower 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 speaking, the drop reflects a number of factors: weaker demand, because high costs have kept some drivers off the roads; a sharp decline in global oil prices in recent months; and the fact that a handful of states have suspended taxes on gasoline.
Regardless of the causes, the lower prices are a welcome change for drivers for whom the added expense — often $10 to $15 extra for a tank of gas — had become yet another hurdle as they sought to get their lives back to normal as the coronavirus pandemic eases.
“We have new rising diseases and inflation, and people expect a recession,” said Zindy Contreras, a student and part-time waitress in Los Angeles, where gas prices are close to $5.40 a gallon. “If I just had to not worry about my gas tank taking up $70 that’d be a huge relief, for once.”
Ms. Contreras has been filling up her 2008 Mazda 3 only halfway as a result of the higher prices, which has been costing her $25 to $30 each visit to the pump, and she had found opportunities to car-pool with friends. These days, Ms. Contreras usually gets gas twice a week, driving 15 miles to and from work each week and an additional 10 to 50 miles a week, depending on her plans.
“The affordability squeeze is becoming very real when you see these high prices at the gas pump,” said Beth Ann Bovino, the U.S. chief economist at S&P Global. “So, in that sense, it’s a positive sign certainly for those folks that are struggling.”
That cushion — cash not spent on gasoline that can go elsewhere — extends to businesses, too, particularly as the price of diesel fuel also drops. Diesel, which is used to fuel, for instance, farm equipment, construction machinery and long-haul trucks, has also fallen from a June record, though at a slower pace than gasoline prices.
The drop in the price of gas is also good news for the economy, as businesses face less pressure to pass energy costs on 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 the drop in gasoline prices. If it persists, the slowdown in inflation could allow the Federal Reserve to ease up on its campaign to raise interest rates.
It would also serve as a victory of sorts for Mr. Biden, who has spent recent weeks trumpeting the drop in gasoline prices, even as he says he expects to do more to bring costs down. Mr. Biden has criticized oil companies for their record profits from high oil and gas prices, and this year he released some of the nation’s stockpile of oil in an effort to keep prices from jumping too fast.
“I’m going to keep doing what I can to bring down 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 a little higher again and then I’m over here struggling to fill up my tank,” said Christina Beliard, a 27-year-old fashion influencer in Bridgeport, Conn.
Ms. 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 drove before. For work, she sometimes needs to drive to locations for her accounts on TikTok and Instagram, platforms on which she promotes brands, and to attend events in New York City, which is about 60 miles from her home.
Connecticut is one of the states that suspended their tax on gasoline through November. And Ms. Beliard, who had been spending from $95 to $100 a week to fuel up her Jeep, is now paying $74 to $80. Still, she is weary of the high tab.
“I’m trying to figure out, how long is this going to last?” she said.
That’s a difficult question to answer. More than half the cost of gasoline at the pump is determined by global oil prices, and those are volatile and subject to myriad forces, many of which are hard to predict.
Oil prices have tumbled to their lowest point since the war in Ukraine began in February, a drop that reflects the growing concern of a global recession that will hit demand for crude. There are several reasons that prices could rise again: The course of the war could further hamper global oil supplies, energy investors’ views on the economy could change and hurricanes later this year could damage Gulf Coast refineries and pipelines, choking off supplies.
For now, though, the steady drop offers a reprieve to Americans who are concerned about their finances as the economy slows.
“If gasoline prices stay at or near the levels they have reached, that would mean much more cushion for households,” Ms. Bovino said.
