The average price on Sunday was $4.98 a gallon compared to $4.99 on Saturday. The average gas price has been $5 or above for the past seven days, the first time record prices have broken that mark. It peaked at $5.02 a gallon on Tuesday and has been down a fraction of a penny every day since.
But drivers shouldn’t get too excited. Aside from the fact that the drop from $5.02 a gallon to $4.98 saves just 80 cents on a 20-gallon tank of gas, it’s very likely that this is just a temporary drop in gas prices.
With many schools on the brink of closure and the summer travel season in full swing, gas demand – and prices – are likely to pick up again soon. The average gas price could approach $6 later this summer given current market fundamentals, said Tom Kloza, global head of energy analysis at OPIS, which tracks gas prices for AAA.
“Everything goes from June 20 to Labor Day,” Kloza said recently of the demand for gasoline as people head out on long-awaited getaways. “If hell or high gas prices come, people will go on vacation.”
And it’s not like $5 a gallon gas is rare now.
According to data from OPIS, nearly a third of the 130,000 gas stations in the AAA survey sell regular gasoline for more than $5. There are 17 states plus Washington DC where the average price is $5 or more, with New Jersey just behind with an average of $4,999. The state with the highest prices remains California, where gasoline averages $6.40 per gallon.
Gas prices have fallen much more slowly than they rose before Tuesday’s record, confirming the old adage that gas prices rise like a rocket and fall like a feather. In the two months leading up to Tuesday’s record, the AAA average price rose 58 times in 60 days and added 94 cents to the national average price. That’s a steady increase of nearly 2 cents a day, compared to less than a cent a day the price has fallen since Tuesday.
Gas and oil prices have been a major drain on many consumers’ budgets. The typical US household buys about 90 gallons of gasoline per month, Kloza said, so the average price is up $1.91 per gallon from last year and the increase costs the typical US household an additional $172 per month or more. There are early signs that high prices could force consumers to cut back on spending at other retailers, raising fears it could be a factor causing the economy to slip into recession.