Why are gas prices going down? Here's what's bringing drivers relief at the pump (2024)

If there are no major unexpected production interruptions, some experts say that prices could keep working their way lower.

NEW YORK — Gas prices are once again on the decline across the U.S., bringing some relief to drivers now paying a little less to fill up their tanks.

The national average for gas prices on Monday stood around $3.44, according to AAA. That's down about 9 cents from a week ago — marking the largest one-week drop recorded by the motor club so far in 2024. Monday's average was also more than 19 cents less than it was a month ago and over 14 cents below the level seen this time last year.

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.

Here's a rundown of what you need to know.

Today's falling gas prices, explained.

There are a few factors contributing to today's falling gas prices. For starters, fewer people may be hitting the road.

“Demand is just kind of shallow,” AAA spokesperson Andrew Gross said, pointing to trends seen last year and potential lingering impacts of the COVID-19 pandemic. “Traditionally — pre-pandemic — after Memorial Day, demand would start to pick up in the summertime. And we just don’t see it anymore.”

Last week, data from the Energy Information Administration showed that U.S. gasoline demand slipped to about 8.94 billion barrels a day. That might still sound like a lot — but before the pandemic, consumption could reach closer to the 10 billion barrel-a-day range at this time of year, Gross noted.

Beyond pandemic-specific impacts, experts note that high gas prices seen following Russia's invasion of Ukraine in 2022 and persistent inflation may have led many Americans to modify their driving habits. Other contributing factors could be the increased number of fuel-efficient cars, as well as electric vehicles, on the road today, Gross said.

Some of this is still seasonal. Patrick De Haan, head of petroleum analysis at GasBuddy, noted that gas prices typically ease in early summer because of refinery capacity. At this time of year, he said, many factors boosting prices in late winter and early spring — particularly refinery maintenance — are no longer present.

“Once refinery maintenance is done, output or utilization of the nation’s refineries goes up — and that contributes to rising supply,” De Haan said. And that stronger supply, paired with weaker consumption, has led to a “bit more noticeable" decline in prices this year. He added that U.S. refinery utilization is at some of its highest levels since the pandemic.

Separately, the Biden administration announced last month that it would be releasing 1 million gasoline barrels, or about 42 million gallons, from a Northeast reserve with an aim of lowering prices at the pump this summer. But De Haan noted that such action has little impact nationally — 42 million gallons equals less than three hours of U.S. daily gas consumption.

“Really, what we’re seeing right now with (declining) gasoline prices ... has been driven primarily by seasonal and predictable economics,” he said.

What states have the lowest gas prices today?

While gas prices nationwide are collectively falling, some states always have cheaper averages than others, due to factors ranging from nearby refinery supply to local fuel requirements.

As of Monday, per AAA data, Mississippi had the lowest average gas price at about $2.94 per gallon — followed by $2.95 Oklahoma and just under $2.97 in Arkansas.

Meanwhile, California, Hawaii and Washington had the highest average prices on Monday — at about $4.93, $4.75 and $4.41 per gallon, respectively.

Why are gas prices going down? Here's what's bringing drivers relief at the pump (1) Why are gas prices going down? Here's what's bringing drivers relief at the pump (2)

Credit: AP

A motorist fills up the tank of a vehicle at a gasoline pump at a Costco warehouse Friday, May 31, 2024, in Aurora, Colo. (AP Photo/David Zalubowski)

What about oil prices?

Experts also point to cooling oil costs. Prices at the pump are highly dependent on crude oil, which is the main ingredient in gasoline.

West Texas Intermediate crude, the U.S. benchmark, has stayed in the mid $70s a barrel over recent weeks — closing at under $78 a barrel Monday. That's “not a bad place for it to be,” Gross said, noting that the cost of crude typically needs to go above $80 to put more pressure on pump prices.

Oil prices can be volatile and hard to predict because they're subject to many global forces. That includes production cuts from OPEC and allied oil producing countries, which have previously contributed to rising energy prices.

OPEC+ recently announced plans to extend three different sets of cuts totaling 5.8 million barrels a day — but the alliance also put a timetable on restoring some production, “which is likely why the price of oil had somewhat of a bearish reaction,” De Haan said.

Could prices go back up?

The future is never promised. But, if there are no major unexpected interruptions, both Gross and De Haan say that prices could keep working their way down.

At this time of year, experts keep a particular eye out for hurricane risks — which can cause significant damage and lead refineries to power down.

“Prices move on fear,” Gross said. In the U.S., he added, concern particularly rises once a hurricane enters the Gulf of Mexico — and even if it doesn't eventually make landfall, refineries may pull back on operations out of caution. Impacts can also range by region.

But barring the unexpected, analysts like De Haan expect the national average to stay in the range of $3.35 to $3.70 per gallon this summer. Gas prices typically drop even more in the fall, and it's possible that we could see the national average below $3 in late October or early November, he said.

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Why are gas prices going down? Here's what's bringing drivers relief at the pump (2024)

FAQs

What causes gas prices to decrease? ›

Gasoline prices can change rapidly if something disrupts crude oil supplies, refinery operations, or gasoline pipeline deliveries. Even when crude oil prices are stable, gasoline prices fluctuate because of seasonal changes in demand and in gasoline specifications.

Are people driving less because of gas prices? ›

Beyond pandemic-specific impacts, experts note that high gas prices seen following Russia's invasion of Ukraine in 2022 and persistent inflation may have led many Americans to modify their driving habits.

What is the driving force behind the change in gas prices? ›

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.

Why are oil prices falling? ›

Oil prices are under pressure as bearish sentiment builds due to OPEC+ underwhelming the market with its commitment to extend its voluntary cuts to Q3 2024 and its base cuts until the end of 2025.

Who controls the price of oil? ›

Like most commodities, the fundamental driver of oil's price is supply and demand in the market. The cost of extracting and producing oil is also an important factor. Oil markets are composed of speculators who are betting on price moves, and hedgers who are limiting risk in the production or consumption of oil.

Will prices go back down? ›

They're most likely gone forever. That's because prices, on average, are a one-way ticket, generally rising over time, and falling only when something has gone wrong with the economy. Officials at the Federal Reserve who set the nation's monetary policy are determined to keep it that way.

Does it make sense to drive for cheaper gas? ›

Ultimately, it comes down to distance, price, scale, and how much your time is worth in deciding whether to drive a substantial distance for cheaper gas. Of course, if we're talking about driving 2-3 miles out of your way to get to significantly cheaper gas, that's a no-brainer.

What are the benefits of lowering gas prices? ›

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. In general, higher oil prices are a drag on the economy.

How gas prices affect the poor? ›

Doubling the price of gas to $4 per gallon doubles the proportion of wage income spent on gas, so that the average for those above poverty is 2.1 percent of wage income, and is 8.6 percent for those below poverty.

Does the government control gas prices? ›

But there's no single person who controls gas prices. Instead, gas prices are controlled by the market forces of supply and demand.

How many gallons to fill a car? ›

How Many Gallons of Gas Can a Car Hold On Average? Most vehicles' average fuel tank capacity is between 10.5 and 18.5 gallons. Smaller vehicles like subcompact crossovers and other hatchback models generally hover somewhere around 12 gallons. However, subcompact models, like the Chevrolet Spark, yield a 9-gallon tank.

What state has the highest gas price right now? ›

Which State Has the Highest Gas Prices?
StateGas Price Today
1California$4.85 $4.85 $4.85
2Hawaii$4.74 $4.74 $4.74
3Washington$4.35 $4.35 $4.35
4Oregon$4.10 $4.10 $4.10
1 more row

Which country has the most oil? ›

Having more than 300 billion barrels of oil reserves, Venezuela has the most oil reserves in the world. Saudi Arabia has the second-largest oil reserves globally. Venezuela still faces economic difficulties in spite of its enormous natural resource base.

Does China have oil? ›

China has one of the world's largest strategic oil reserves.

What is the highest price oil has ever been? ›

Historically, Crude Oil reached an all time high of 147.27 in July of 2008. Crude Oil - data, forecasts, historical chart - was last updated on June 20 of 2024.

What influences gas prices? ›

The main components of the retail price of gasoline
  • The cost of crude oil.
  • Refining costs and profits.
  • Distribution and marketing costs and profits.
  • Taxes.

How much will gas be in 5 years? ›

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.

Why is gas so high right now in the USA? ›

The recent surge in price, he said, is due entirely to the annual reformulation of gas that produces “summer blend” — a gas with additives that reduce evaporation and results in less air pollution and smog. It's a more expensive refining process, which is why prices go up every summer.

What is the highest gas price ever? ›

Adjusted for inflation, the average price of gas in 1981 would have equalled $2.42 a gallon in 2020. To which drivers in 2022 could only say: Give us that deal! According to CNN Business, the price of gas at the pumps across the nation met an all-time-high average of $5.02 per gallon on June 14, 2022.

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