In the midst of an ongoing conflict between Hamas and Israel and a 5% surge in US crude oil futures, the American public has witnessed a surprising downturn in gasoline prices over the past month. The current national average stands at $3.58 per gallon, marking a ten-cent decrease from just one week ago and a thirty-cent drop from the previous month. Even California, known for its notably high gasoline costs, has seen a significant reduction of seventeen cents per gallon compared to last week, although the state’s average remains steep at $5.59 per gallon.
While these figures may appear foreboding, it is crucial to note that Americans can anticipate paying less at the pump compared to the same period a year ago, when oil prices mirrored today’s levels. Andrew Gross, the spokesperson for AAA, attributes this trend to the adoption of a more economical winter blend of driving fuel and reduced seasonal demand. Jeff Barron, a senior analyst in petroleum markets at the US Energy Information Administration, concurs, stating, “Gasoline demand has been weak. Depending on which week you’re looking at it’s actually fallen below 2020 levels.” Tom Kloza, OPIS Global Head of Energy Analysis, posits that if prices continue on their current trajectory, drivers may see savings ranging from twenty to twenty-five cents per gallon. Rebecca Babin, a CIBC Private Wealth Energy Trader, elucidates that with OPEC+ production cuts and independent reductions from Saudi Arabia, supply and demand are now more closely aligned than ever. However, she warns that if prices breach the $90 threshold, it could result in a decline in demand.
Despite the surge in US crude prices, the confluence of narrowing refinery margins, lower fuel consumption, and OPEC+ production cuts has resulted in substantial savings for consumers at the gasoline pump. This trend is expected to persist in the coming months. This relief comes after reaching peak prices in mid-September of 2023. Now, with prices lower than a year prior and projected to further decrease throughout the remainder of the year, staying local may be the most prudent choice for holiday travel. With crude prices still lingering around 7% below their 2023 peak, drivers can take solace in the knowledge that local gasoline prices align with the national average, and may even drop further in the months ahead.
Source: Yahoo Finance
