The historic streak of lower gasoline prices is over.
After falling daily for more than three months, gas prices in the United States rose slightly — by a penny — to $3.68 a gallon, on average Wednesday, according to AAA.
This ends 98 consecutive days of falling prices at the pump, the second longest such streak on record since 2005.
The last time the national average gasoline price rose was June 14, when it hit a record high of $5.02. Prices have fallen every day since then and Thursday would have marked the 100th consecutive day of decline.
Falling gasoline prices were driven by a range of factors, including stronger supply and weaker demand as drivers balked at high prices and unprecedented releases of emergency oil by the White House .
Another major factor that had lowered gasoline prices: growing concerns of a global recession that could hurt gas demand. People who lose their jobs don’t have to drive to work, and even those who have jobs cut spending during recessions.
The strong dollar has also helped push down the price of gasoline, as the price of crude oil is in dollars. This means that each dollar can buy more oil than it would if the value of the currency were stable or falling. The dollar index, which compares the value of the greenback to major foreign currencies, is up 15% this year. It also means oil prices are rising faster for countries that don’t use the dollar, dampening global demand.
At the same time, oil flows from Russia have held up better than expected despite sanctions and the war in Ukraine. Russia’s invasion of Ukraine and subsequent sanctions helped trigger the sharp rise in oil and gas prices. The average price on the day of the invasion was $3.54 a gallon, just slightly lower than today. Russia’s announcement on Wednesday that it would increase its troop mobilization helped push crude oil futures up 2% on global markets.
Gas prices are likely to remain relatively close to current levels in the near term, said Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices nationwide for AAA.
“I don’t think you’ll see a major move up or down,” he said recently, ahead of Wednesday’s modest price rally. He said competing forces will affect prices in the short term.
US refining capacity remains limited. And OPEC and other oil-producing nations recently agreed to cut production. Both put upward pressure on prices.
Meanwhile, seasonal factors, such as the end of the summer driving season and the annual end of U.S. environmental regulations requiring a cleaner, more expensive gasoline blend during the summer months, could help drive down price. Also pushing prices lower: Oil traders remain nervous about the state of the global economy.
“Crude doesn’t have any speculative investment money behind it right now,” he said.
Wholesale gasoline futures point to a sharp drop in gasoline prices by the end of the year, with the possibility that gasoline below $3 a gallon will be common in much of it. of the country by then, Kloza said. But he warned that “futures prices are a notoriously poor predictor of what the future will bring.”
Although gasoline under $3 remains scarce — only 5% of 130,000 U.S. gas stations sell gasoline below that price, according to OPIS — relatively cheap gasoline has become much more common with the months of decline. Nearly one in four stations nationally sell gasoline for less than $3.25 per gallon and 56% sell gasoline for less than $3.50 per gallon.
Cheaper gasoline has boosted the US economy significantly, easing inflationary pressures and giving Americans extra cash to spend. Given that a typical U.S. household uses about 90 gallons of gasoline per month, lower gasoline prices are saving those households about $120 per month from what they have been paying since the peak of June.
A one-cent hike in gasoline prices isn’t a significant change for most drivers, and prices could crash again as global economic concerns rise and fuel demand continues to slump. to lower.
Still, if gas prices start to rise, it could undermine the Biden administration’s and Federal Reserve’s efforts to control inflation. Falling gasoline prices are the only reason U.S. consumer prices have remained broadly flat in recent months after rising sharply in 2021 and earlier this year.
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