The national average for a gas gallon decreases by less than $4

August 12, 2022: -On Thursday, the national average price for a gallon of gasoline decreased below $4 for the initial time since March, in a continuing sign that inflationary pressures for consumers eased.

On Thursday, the price for a normal gallon of gas stood at $3.99, according to AAA. That’s over a dollar more undersized than the record $5.02 consumers paid in June, unadjusted for inflation.

The recent decline is due to high prices keeping consumers off the road and therefore curbing the market. Oil prices have dropped sharply, and the government has released barrels from the Strategic Petroleum Reserve, which brings more supply to the demand. Some states have suspended their gas taxes, partly shielding residents from rising prices.

Still, the national standard is 81 cents for each gallon above the previous year’s levels in what’s evolved into a pain point for the Biden administration ahead of the midterm elections.

Higher energy costs have been a significant driver of inflation, which has been running at the most desirable level in more than 40 years. However, the latest consumer price index report showed pressures easing a bit, mainly because of declining energy prices.

But a few said that consumers would not celebrate still. Bob Yawger, director of energy futures at Mizuho, believes the recovery could be brief due to several catalysts pushing prices higher in the coming months.

For one, refines power in the U.S. remains extremely tight. Should a storm knock one of the Gulf Coast refiners offline, for example, costs at the pump could increase once again. The release of barrels from the Strategic Petroleum Reserve will also end this fall, while a rebound in economic activity in China could increase demand for petroleum products.

The biggest wild card, however, is the oil price, which accounts for more than half of what customers spend at the pump.

On Thursday, West Texas Intermediate crude futures, the U.S. oil benchmark, is trading about where they stood in February before Russia invaded Ukraine. The contract increased 0.7% to $92.55 for each barrel.

WTI traded above $130 in March. In recent weeks, slump fears and a possible slowdown in demand include sent costs dropping.

“I think it’s going to be quick,” John Kilduff, partner at Again Capital, said of the declines at the pump. He stated that gasoline futures, a proxy for gas prices, are around 30 cents per gallon above their recent low.