Gas prices are cheaper than last summer and miles away from the nightmare of 2022 | CNN Business (2024)

Gas prices are cheaper than last summer and miles away from the nightmare of 2022 | CNN Business (1)

Gas prices have moved steadily lower this year, helping take pressure off cash-strapped consumers.

New York CNN

Exactly two years ago Friday, gasoline prices peaked at a record of $5.02 a gallon nationally.

The gas spike of 2022 crushed consumer confidence, spooked investors and put a hole in family budgets. It helped propel the national inflation rate to 9% for the first time since the early 1980s.

“Five-dollar gas sent shockwaves through the system. No American outside of California had ever seen five-dollar gas before,” said Patrick De Haan, head of petroleum analysis at GasBuddy.

Gas prices today are not cheap – but they are miles away from that point.

The national average for regular gas stood at $3.46 a gallon on Thursday, according to AAA. Not only is that down $1.56 from the record set in June 2022, it’s down 13 cents from this point last year.

“We’ve come a long way. We’re in a much healthier and balanced market than two years ago,” said De Haan.

Of course, gas prices were cheaper during the Covid-19 pandemic because demand was severely low. Even in June 2021, the national average was a bit lower, at about $3.08 a gallon.

Driving down inflation

Gas prices peaked this spring at $3.68 a gallon on April 19. The fact that prices have moved steadily lower since then has helped take pressure off cash-strapped consumers.

Cooler gas prices have also played a central role in helping to drive down inflation.

The Bureau of Labor Statistics said this week that monthly consumer prices were unchanged between April and May for the first time in nearly two years. One of the biggest catalysts was the fact that prices at the pump have become cheaper.

The New York Stock Exchange is shown on Tuesday, June 11, 2024. Wall Street stumbled in premarket trading ahead of a busy week of inflation reports and the Federal Reserve's latest interest rate policy decision. Peter Morgan/AP Related live-story The Fed expects to cut rates just once this year

Easing inflation has kept alive hopes that the Federal Reserve will be able to start cutting interest rates at least once before the end of the year. That, in turn, would give borrowers a break from historically high rates on mortgages, credit cards and car loans.

There could be political implications, too. In part because they are so visible, gas prices play a key psychological role in how people feel about the economy.

It’s not clear if voters will — or even should — credit the White House for falling gas prices. However, a spike to $4 would likely have negative consequences for President Joe Biden’s reelection campaign, since it would feed concerns about the high cost of living and further dent relatively low consumer confidence.

“Gas prices are so central to how people think about their financial situation. They are the single most important variable in terms of how people are doing — especially low-income households,” said Mark Zandi, chief economist at Moody’s Analytics.

Drivers in some states are paying much less than a year ago for gasoline, including Utah (69 cents), Washington (47 cents) and Idaho (38 cents). There are also significant 12-month price drops in some key battleground states such as Arizona (59 cents), Wisconsin (33 cents) and Nevada (24 cents), according to AAA.

“As the summer driving season continues, Americans are seeing gas prices drop around the country,” White House spokesperson Angelo Fernández Hernández told CNN in a statement. “But there is more work to be done — the President remains committed to lowering prices at the pump for Americans and maintaining a stable and secure energy supply.”

Real gas prices are cheaper than in 2018

Many people may wish for the $2 gas prices of last decade. Of course, people are making more money than they were a decade ago, so it’s not a fair comparison.

Yet, on an inflation-adjusted basis, gas prices are right in line with where they were before Covid.

Real (inflation-adjusted) gas prices stood at $3.34 a gallon in June 2019 and $3.61 in June 2018, according to the US Energy Information Administration. The current national average of $3.46 is in the middle of that.

Although the White House spokesperson noted “historic investments” in clean energy, he also acknowledged that “record domestic oil and gas production is helping to meet our immediate needs.”

Indeed, even though the oil industry frequently battles with the White House over regulation, US oil output is off the charts.

An oil refinery in Big Spring, Texas on October 4, 2023. Brandon Bell/Getty Images Related article Why oil companies are raking in record profits under Joe Biden

Powered by the shale oil boom, the United States produced 13.2 million barrels of crude oil per day in March, according to federal statistics. That’s just shy of the record 13.3 million in November.

“Just think about where gasoline prices would be without US shale,” said Rob Thummel, senior portfolio manager at energy investment firm Tortoise.

Oil prices are higher than at this point last year, in part because OPEC+ continues to restrain production. That also reflects concerns about both the war in Ukraine and the Israel-Gaza war.

Gas prices, however, have been guided lower by improving stockpiles of gasoline.

“It’s all about inventories,” Thummel said. “Inventories are likely headed back to normal levels, which will keep gasoline prices lower throughout the summer driving season. That’s good news for consumers.”

GasBuddy’s De Haan noted that gas prices have been on the low end of what his firm was forecasting for June, in part because fewer people are driving.

If a hurricane or oil price shock is avoided, De Haan said gas prices should remain subdued. (Experts have forecast a hyperactive Atlantic hurricane season this year.)

“It’s a good outcome — dare I say a better-than-expected outcome,” he said.

Gas prices are cheaper than last summer and miles away from the nightmare of 2022 | CNN Business (2024)

FAQs

Gas prices are cheaper than last summer and miles away from the nightmare of 2022 | CNN Business? ›

The national average for regular gas stood at $3.46 a gallon on Thursday, according to AAA. Not only is that down $1.56 from the record set in June 2022, it's down 13 cents from this point last year. “We've come a long way. We're in a much healthier and balanced market than two years ago,” said De Haan.

Who benefits the most when gasoline prices go down? ›

Inversely, when gas prices fall, it is cheaper to fill up the tank for both households and businesses and really eases costs on transportation-focused industries like airlines and trucking—but it also puts a damper on the domestic oil industry.

Why are gas prices so low in the US? ›

Why the recent fall in prices at the pump? Industry analysts point to a blend of lackluster demand and strong supply — as well as relatively mild oil prices worldwide.

Will gas be cheaper in the future? ›

Gas Overview

According to our Gas price prediction, GAS price is expected to have a -15.14% decrease and drop as low as by July 16, 2024. Our analysis of the technical indicators suggests that the current market feeling is Neutral Bearish 34%, with a Fear & Greed Index score of 33 (Fear).

Why are gas prices higher in the summer than the winter? ›

Demand for travel is a lot higher in the Spring and summer because kids are home from school and families are more likely to go on vacations, higher demand always leads to higher prices, economics 101. Secondly the summer blend of gasoline is more expensive than the winter blend.

Who profits most from gas prices? ›

Here's how much Big Oil raked in as gas prices spiked:
  • Valero – $2.6 billion.
  • Phillips 66 – $2.1 billion.
  • Marathon – $3.28 billion.
  • PBF Energy – $786 million.
  • BP – $3.3 billion.
  • Exxon – $9.1 billion.
  • Chevron – $6.5 billion.
  • Shell – $6.2 billion.
Nov 8, 2023

What caused the gas prices to drop? ›

Global prices on steady decline due to higher production

Gas prices are also down globally because of an increase in gas production despite a lower demand. OPEC+ has announced that it will cut oil supply during the first quarter of 2024 to support oil prices.

Who controls gas prices in America? ›

Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.

What is the true cost of gasoline? ›

Gasolinegate applies the concept of Total Societal Impact (TSI)—a measure of all the benefits and costs associated with a product over its lifetime—to gasoline, and cites the Center for Investigative Reporting's conclusion that the true cost of gasoline is actually $15 per gallon.

How much will gas cost in 2025? ›

U.S. gasoline prices are expected to average around $3.40 a gallon in 2024 and $3.20 in 2025, compared with around $3.50 in 2023, according to the EIA's Short Term Energy Outlook report.

What will gas cost in 2024? ›

Analysts at GasBuddy and the U.S. Energy Information Administration expect fuel prices to continue to fall throughout 2024, with consumers paying the lowest price per gallon since 2021. According to GasBuddy's annual Fuel Price Outlook, the average cost will drop from $3.51 per gallon in 2023 to $3.38 in 2024.

What state has the highest gas prices right now? ›

California

What month is gas the cheapest? ›

Traditionally, gasoline prices are at their lowest during the first week of February and then begin to climb, often peaking right before Memorial Day.

What time of year is gas most expensive? ›

Unfortunately for drivers, we often see the highest gas prices during the summer, starting around Memorial Day. In May 2022, U.S. consumers paid an average of $1.50 per gallon more than they were at the same time in 2021, according to AAA.

Does gas last longer in the winter or summer? ›

Cold weather and winter driving conditions can significantly reduce fuel economy. Fuel economy tests show that, in city driving, a conventional gasoline car's gas mileage is roughly 15% lower at 20°F than it would be at 77°F. It can drop as much as 24% for short (3- to 4-mile) trips.

What companies benefit from low natural gas prices? ›

Natural gas prices that plunged in 2023 remain low creating contrarian opportunities for investors. The Williams Companies (WMB): Stable WMB stock is a smart choice overall. Cheniere Energy (LNG): Cheniere Energy benefits from a strong export business.

Who is most affected by gas prices? ›

That said, rising gas prices do affect both consumers and the economy adversely, and they are especially harmful to lower- and moderate-income households. One assumption is that these households do not all own cars, that many use mass transit instead.

Who benefits from higher oil prices? ›

Domestic oil producers and shareholders are reaping profits from the rise in crude oil. U.S. domestic oil producers and their shareholders are reaping the benefits of the rise in crude oil and gas prices.

What stocks go up when oil prices go up? ›

One sector of the stock market is strongly correlated with the spot price of oil: transportation. This makes sense because the dominant input cost for transportation firms is fuel. 6 Investors might want to consider shorting the stocks of corporate transportation companies when oil prices are high.

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