A much needed reprieve from gas prices is finally upon us, as the cost of gasoline has started to go way down.
Americans rely heavily on their cars and trucks for personal and business purposes. We love to travel and explore, often heading out for lengthy road trips during the summer months. And with most cities designed to be vehicle-friendly rather than pedestrian-friendly, cars are a must to take care of daily needs. So the shocking increase in gas prices we have experienced this year was unwelcome news to most.
At the start of the summer season, gas prices jumped to a record high – with a national average reaching $5.02 in June. The increased cost at the pump, combined with rapid increases in commodity prices, put a tremendous squeeze on the pocketbooks of most Americans. It rapidly forced a shift in daily habits, with many areas seeing a stark decrease in cars on the road.
But the high cost at the pump doesn’t just hit average Americans. Businesses are feeling the pinch as well. With our supply chain relying heavily on the transportation of goods, including parts and ingredients, increased gas prices began forcing commodity prices up even more. It has become increasingly expensive to do business in any industry, and those costs get passed to consumers.
Depending on who you ask, you’ll receive a different answer on why gas prices reached an all-time high at the start of summer. Some say it is due to the US refusing to purchase crude oil from Russia after their war with Ukraine kicked off. Others claim demand was much higher than supply, thus forcing the drastic increase.
Either way, Americans felt the pinch so deeply they started changing their driving habits. These changes have remained, despite a drop in gas prices. The AAA noted fewer drivers gassed up last week than in years past.
So all sides met the sudden decrease in gas prices over recent weeks with a sigh of relief. According to data gathered by AAA, the national average last week fell to $3.99 per gallon. And industry experts believe they will continue to fall until they level out around $3.70 or $3.80.
Those watching the market expect gas prices to continue dropping. In part, this is due to demand easing. But it is also thanks to a sharp drop in the price of US crude (dropping roughly $28 per barrel since June). Additionally, the Biden administration began releasing 1 million barrels daily from the Strategic Oil Reserves back in March. They plan to flood the market with additional supply for the foreseeable future.
On top of that, Russia’s oil production has not tapered off as drastically as analysts predicted. Their relatively stable production levels mean that the global oil supply is not as tight as was expected. It is welcome news for the market overall and will contribute to a decrease in gas prices for Americans.
However, the head of petroleum analysis at GasBuddy, Patrick De Haan, warned CNN that we may not be out of the woods just yet. While gas prices show positive changes, we are gearing up for hurricane season. The Us relies heavily on the offshore rigs. So hurricane season is historically a thorn in the side of oil production. So keep your gas tank full and eyes on the news to be prepared in case prices start rising again.