Gas prices are down: Will this trend continue for the rest of the year?

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Gas prices are down more than they have been in months — will they continue to fall for the rest of the year?

The traditional end-of-summer weekend is almost here, and whether you’re heading to a barbecue in a local park or sitting in traffic on the way to the beach, it will at least be costing you less to drive than it did for Memorial Day.

The average regular gasoline price has hit $3.88, according to the Energy Information Administration. That’s more than 20 percent below its peak of just over $5 in June. In some parts of the country, gas prices have felt downright 2020, with prices falling to near or even below $3.

Americans have been watching the cost of gas closely and nervously since early last year when they started to creep up and then especially this year when they spiked following Russia’s invasion of Ukraine. But according to the progressive polling outfit Navigator Research, they are also taking note as prices inch back down — and when asked who or what they credited for the price drop, “among the most commonly cited” was President Joe Biden.

And it’s not just political pollsters picking this up. The University of Michigan consumer sentiment survey, which measures how people feel about the economy broadly and when it comes to their own personal situations, found that for the past year, the majority of Americans felt negative on both counts. But coinciding with a considerable drop in gas prices (the lowest they’ve been since the Russian invasion of Ukraine) is a notable upturn in how people feel about the economy, with consumers saying they expect a slightly slower rate of inflation moving forward.

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What caused gas prices to (finally) start heading back down?

The steadily falling gas prices have been the result of federal policy and some luck — good and bad. The good has been twofold. First, refineries have generally been running at incredibly high capacity all summer without breaking down — although an electrical issue in an Indiana refinery bumped up prices in the Midwest earlier this month. The second piece of good luck has been the weather.

What was expected to be an above-average hurricane season has so far resulted in three named storms — the last one of which dissipated in early July — and no hurricanes. That means the heavy concentration of refineries on the Gulf Coast has not had to shut down due to bad weather.

Oil prices, too, have fallen well off their highs in the immediate invasion of Ukraine, as Russian oil has still found its way to market despite explicit and implicit sanctions. And Chinese demand for oil has fallen as the country struggles to keep covid’s spread as slow as possible, even risking its economy to do so.

Does this mean gas prices will stay low — or even fall — as we go into the end of the year?

It’s possible that they could at least stay steady, GasBuddy Petroleum Analyst Patrick De Haan told Grid.

“There may be more downward pressure on prices,” De Haan said, “If we get out unscathed, the end of the year will probably feature lower prices where we stand today.” Refiners will typically switch to a winter blend of fuel in September which, along with the end of summer driving season, could put downward pressure on prices through the rest of the year.

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“The mid threes would be the most likely place for the national average on the last month or two of the year,” De Haan said.

Thanks to Lillian Barkley for copy editing this article.

  • Matthew Zeitlin
    Matthew Zeitlin

    Domestic Economics Reporter

    Matthew Zeitlin is an economics reporter at Grid focused on the domestic impact of major stories such as coronavirus, the supply chain and economic volatility.

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