The average price of a gallon of regular gasoline fell to $4.32 a gallon, compared with $4.33 a gallon on Monday, according to AAA data. Even by just nine-tenths of a cent, it was the biggest one-day decline in gas prices since August 2021.
Of course, gas prices remain historically high. Until last week, the record high was $4.11 a gallon, a level first reached in 2008. Gasoline set four straight records last week before prices were virtually flat over the weekend and Monday. The drop in retail gas prices follows a sharper drop in oil prices in trading on Monday, when prices fell 8%. If oil prices stay at this level, there could be more substantial relief at the gas station, perhaps as much as 20 cents a gallon, predicts Tom Kloza, global head of energy analysis at Oil Price Information Analysis, which tracks gasoline prices. for AAA. But it is not surprising that the fall in gasoline prices followed the fall in oil prices.
“Gasoline prices can go up like a rocket and go down like a feather,” Kloza said.
Even if drivers get that 20 cents a gallon at the gas station, it’s unlikely to last long.
Gasoline demand in the US is likely to rise, especially with a record increase in the number of jobs over the past year and an increase in the number of workers who worked from home returning to the office.
Kloza said that as the summer driving season approaches and the United States moves to a more expensive summer blend of gasoline designed to combat smog and pollution, prices are likely to rise to around $4.50 a gallon.
There are two factors that can limit the rise in oil and gasoline prices: one is good, the other is bad.
Peace in Ukraine would be good, especially peace that led to the lifting of sanctions against Russia by the United States and many other Western countries. Hopes for peace talks on Monday partly helped push down oil prices.
Russia is one of the largest oil exporters in the world. While relatively little Russian oil reaches US consumers, oil prices are priced in global commodity markets. Thus, interruptions in the supply of oil led to a sharp rise in prices.
The bad news, which could drive prices down, is a new surge in Covid-19 forcing countries that have reopened to re-impose restrictions on businesses and individuals. Over the weekend, China introduced new restrictions due to the Covid outbreak. According to analysts, this was one of the factors behind the drop in oil prices on Monday. The rise in gas prices this year has been historic, at times reaching the steepest pace since Hurricane Katrina hit the US in the Persian Gulf. Coast in 2005, devastating oil platforms and refineries in the region. The US average price has risen 78 cents, or 22%, since February 23, the day before Russia’s invasion of Ukraine.