Gas Prices Fall Below $4—But Are Still Higher Than Before Russia Invaded Ukraine
The average national price of gas fell below $4 per gallon on Thursday for the first time since March, according to the American Automobile Association’s (AAA) tracker, but the cost remains higher than lows seen earlier this year, while analysts warn of another potential spike in the future.
Gas Buddy, which also tracks gas prices, reported a slightly lower average price of $3.969 per gallon.
While the drop will offer some relief to Americans at the pump, prices of gasoline still remain higher than the $3.318 per gallon at the start of 2022.
The price also remains significantly elevated compared to the $3.184 price from 12 months ago.
The fall in gas prices has been attributed to multiple factors, including a drop in demand for gasoline, a slump in global crude oil prices and various state gas tax holidays, the New York Times noted.
The continued drop in prices since June, however, have helped ease consumer price inflation—which dropped from a 40-year-high 9.1% in June to 8.5% in July.
What To Watch For
Reuters, citing analysts, reports that gas prices could rise once again in the next few months as demand picks up again while an “unsustainable deficit” remains on the supply side. An intensification of the war in Ukraine and other geopolitical moves could also lead to another spike in crude oil prices which would then be passed down to consumers at the pump.
$3.89. That’s what the price of a gallon of gas could drop to next week, according to a forecast made by Patrick De Haan, the head of petroleum analysis at GasBuddy.
Gas prices in the U.S. began surging in March after Russia invaded Ukraine earlier this year, causing a major shock to global crude oil supplies. To retaliate against Russia’s invasion, the U.S. and its European allies hit Moscow with a series of sanctions that included a ban on oil imports from the country—with some exceptions. The current drop in prices has been significantly aided by a slump in global crude oil prices with the benchmark Brent Crude dropping to $98.26 per barrel on Thursday—down significantly from $124 in June and a 14 peak of more than $133 in March. It is unclear how long this decline will last.