Drivers across the nation are experiencing a welcome decrease in gasoline prices, a trend that has brought relief at the pump in recent weeks. This drop, which began after prices peaked in April 2024, has seen gas prices fall by approximately 13%, translating to nearly a 50-cent reduction per gallon, according to data from AAA.
Currently, the national average price for a gallon of gas stands at $3.20, based on recent AAA figures. Even more encouraging for motorists, sixteen states are now enjoying average gas prices below $3 per gallon, including states like Texas, Georgia, North Carolina, Wisconsin, Kansas, and Iowa. Experts interviewed by ABC News suggest that this downward trend may continue, potentially pushing the national average below the $3 mark for the first time since May 2021.
Several key factors are contributing to this decrease in gas prices. A significant element is the typical seasonal shift in demand. As the peak summer travel season concludes and autumn approaches, demand for gasoline naturally softens. Families are back from summer vacations, and the routine of work and school commutes replaces leisure travel, leading to less overall driving.
Adding to this demand-side effect is a crucial change in fuel production. Refineries are transitioning to the production of a less expensive winter blend of gasoline. During the fall and winter months, refineries face fewer stringent environmental regulations from the Environmental Protection Agency. This reduced regulatory burden allows them to produce a cheaper blend of fuel, which in turn contributes to lower prices at the pump. “This is something we see every year,” Andrew Gross, a spokesperson at AAA, explained to ABC News, highlighting the predictable nature of this seasonal price adjustment.
Beyond seasonal factors, a substantial decline in the cost of crude oil is playing a major role in the gas price drop. Crude oil is the primary raw material that refineries process into gasoline. The price of Brent crude oil, a global benchmark, has fallen dramatically, experiencing a 21% decrease over the past year and a more than 7% drop in just the last month.
This decrease in crude oil prices is driven by a combination of increased oil production and a global economic slowdown. Oil production has surged, increasing the supply of crude oil available on the market. Simultaneously, many economies worldwide are experiencing a slowdown, which in turn reduces the global demand for crude oil as businesses curtail production and consumers reduce spending. This imbalance between increased supply and decreased demand has created downward pressure on crude oil prices, which directly translates to lower gasoline prices.
“There’s pretty good supply and not much demand,” Timothy Fitzgerald, a professor of business economics at the University of Tennessee specializing in the petroleum industry, told ABC News, succinctly summarizing the core economic principle behind the price decrease.
Looking ahead, experts anticipate that gas prices will likely continue to decline throughout the fall. This expectation is based on the continued weakening of demand and the full implementation of the cheaper winter fuel blend across the country. Andrew Gross from AAA noted, “Nearly every state east of the Rockies now has some retail outlets selling gas below $3 a gallon and the national average may very well follow suit in October,” reinforcing the positive outlook for consumers in the near term.
However, while the current trend is downwards, experts caution that potential disruptions could reverse this relief. The hurricane season in the Gulf of Mexico poses a risk. A major storm could impact oil refineries in this critical region, potentially disrupting production and tightening gas supply, which could lead to price increases. Furthermore, an unexpected economic surge, possibly triggered by anticipated interest rate cuts, could stimulate demand for oil and gas, pushing prices upwards again, as Patrick de Haan from GasBuddy pointed out.
“There are some wild cards that we’re watching,” de Haan added, emphasizing the uncertainties that could influence future gas prices. Despite these potential risks, barring unforeseen events, the current factors suggest that consumers can expect to enjoy lower gas prices for the remainder of the fall.
Consumers are advised to take advantage of these seasonal lows, as experts predict that gasoline demand will begin to rise again in the early part of next year, reversing the current downward trend. For now, however, drivers can benefit from the confluence of seasonal demand reductions, the shift to winter fuel blends, and lower crude oil costs that are collectively driving gas prices down.
