Why Have Gas Prices Gone Down - Gas mileage is one of the most important factors when choosing a car, especially in today's climate. This past March, gas prices hit a record high of $4.33 a gallon, well above the national average. Some drivers have even resorted to trading in their gas cars for hybrids and electric vehicles. Even cars that typically get great fuel economy are struggling, so when can we expect gas prices to drop in 2022? Here's what some experts have to say.
The latest AAA data shows the national average reached $4.67 in the first week of June. In some states, such as California, you may pay more than $6 for a gallon of gas. Georgia is currently the cheapest place to buy gas, averaging $4.16 per gallon.
Why Have Gas Prices Gone Down
At this time last year, the national average was just over $3 a gallon. Unfortunately, the national average is expected to remain above $4 for most (if not all) of 2022.
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According to Kiplinger, the primary reason for the incredible prices we've seen at the pump is demand for oil. The oil industry was thrown for a loop in 2020, with more people staying at home and using less gas. Oil was dirt cheap that year (under $1 at one time) and some suppliers paid people to pick up extra oil.
Of course, after the introduction of the COVID-19 vaccines and the relaxation of safeguards, people felt more comfortable buying more gas. But the oil industry was not prepared for this sudden demand for oil production. Producers are also hesitant to sink money into drilling for abundant oil only to experience another unprecedented downturn.
Energy companies are also largely opposed to new oil production, particularly for the financial benefits. These companies would rather pay higher share buybacks and dividends to their investors. Wall Street continues to encourage this practice today.
Emissions targets set by the US government are also partly responsible. President Joe Biden has set a goal of reducing our emissions by 50% in 2030, so internal combustion engine (ICE) cars could be phased out later.
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The government also imposed strict restrictions on where energy companies are allowed to set up oil drills. Additionally, with the demise of the Keystone XL pipeline, Canadian oil can only reach the US by rail. This method is more expensive, meaning higher gas prices to offset the cost.
Finally, 2022 saw the Russo-Ukraine war. Russia is one of the world's largest oil producers, but many Western energy suppliers have shunned the country since the attack.
In March, President Biden banned all imports of Russian oil, coal and natural gas. Sure, the US gets about 8% of its oil from Russia, but that still means higher gas prices.
Unfortunately, experts are still unsure when gasoline prices will return to relatively normal levels. In the worst-case scenario, it seems likely that the only reason for a dramatic decline would be an economic downturn. All of the conditions that directly contributed to high gas prices are unlikely to end in the near future.
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A few months ago, some analysts expected the national average to go no higher than $4.50 a gallon. This is still true in certain states.
According to Penn Live, experts are now predicting that a future of $5 per gallon for the national average is entirely possible. Memorial Day weekend saw a huge spike in gas prices nationwide, which can only go up this summer. Brent crude is also now selling at $120 a barrel, up from $100 in March. The war continues with little hope of relief for the people of Ukraine. For Americans, the biggest impact has been on gas prices, which have risen nearly 80 cents a gallon in just two weeks.
But the worst fears of a 1970s-style energy crisis are beginning to fade. A myriad of forces are driving down oil prices - from China's new COVID-19 lockdown, which could dampen demand, to the potential restart of the Iran nuclear deal, which would put more Iranian crude on the market.
From February 23, the day before Russia launched the attack, oil prices rose 34 percent to around $124 a barrel on March 8. Futures for the U.S. benchmark, known as West Texas Intermediate, retreated to around $96 a barrel on Tuesday, or 5 percent higher than the pre-attack price.
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As we have often seen in the past, it takes longer for petrol prices to rise than for crude oil. But at least pump prices have stopped going up and should start falling slowly without any nasty surprises.
"The decline in #gas prices should accelerate and if oil stays in double digits, the national average could drop below $4/gal next week." Stations lost their shirts but now the margins are improving and they will start discounting you,” Patrick de Haan, head of oil analysis at GasBuddy, tweeted Monday night.
In Massachusetts, the average price of regular gasoline was $4.34 a gallon Tuesday, down 2 cents from a record high set on March 11, according to AAA. But the cost of filling the tank is 24 percent higher than a month ago.
At such a time, many complain that the gas stations are insulting the customers. And it's true: Many retailers are taking advantage of oil market volatility by gradually lowering pump prices, even as crude prices fall sharply.
Why Gas Prices Haven't Dropped Yet
Like it or not, that's how business works. Remember that selling gas is a relatively low margin business. Over the past five years, gross margins have averaged 27.2 cents per gallon, or 10.7 percent, according to NACS, a trade group for gasoline retailers.
Of course, there are gas stations that compete aggressively on price. Although the national average is barely falling, cheaper gas is available.
"I can tell you that off-price retailers, where I almost always buy gas, have already dropped their prices by about 25 cents," said Mary Maguire, director of public and government affairs for AAA Northeast. “A service station that is solely dependent on gas sales can keep prices higher for longer than a retailer with an alternative source of revenue, such as a car wash or convenience store.
It may take about six weeks for crude oil prices to drop at gas stations. (NewsNation) - Some consumers are still experiencing pain at the pump, but drivers are starting to see some relief. After hitting an all-time high last month, gasoline prices are now on a downward trend.
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The nationwide average gas price was $4.72 a gallon Friday, down from $4.84 a week earlier, according to AAA. That's also down from a record high of $5.01 hit on June 14. However, the price is still $1.58 higher than this time last year.
Experts say gasoline supplies have improved — refineries are producing more gas, diesel and jet fuel.
While drivers can expect to see this trend continue for another two or three weeks, it will likely slow down soon.
Recent increases in interest rates and the ongoing conflict between Russia and Ukraine will limit the decline in gas prices.
Why Are Gas Prices Going Up? Will They Go Down?
"We probably won't get back to normal prices until we have a long-term solution with Russia and Ukraine." Unless new capacity is installed in Russia or there is a regime change in Russia," said Patrick de Haan, head of oil analysis at GasBuddy.
Experts advise consumers to use apps like Waze, Google or GasBuddy to find the most competitive gas prices in their neighborhood.
As prices drop, experts say drivers will likely see more competition among gas stations to attract customers.
"It's a really sad day. The tragedy that happened here today is heartbreaking," Santa Rosa City Schools Superintendent Anna Tronell said at the news conference.
Why Are Gas Prices So High Right Now?
Taylor told the judge he had no conflict with representing Kochberger because he had never met Kara Northington, Gianna Kernodle's mother.
"I actually think it's very helpful for the jury to visualize some of the evidence," Marris told News Nation host Dan Abrams.
The United States is asking Mexico to extradite the son of former cartel leader Joaquin "El Chapo" Guzman.
Residents of eastern Palestine say all the apparent security inspections officials are still experiencing do not match the symptoms.
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A man has been arrested at a Pennsylvania airport after explosives were found in a checked bag on a Florida-bound flight, authorities said. This is an archived article and article information may be out of date. See the story's timestamp when it was last updated.
(NEXT) - There was a glimmer of hope for motorists on Tuesday, as oil prices fell back below $100 a barrel. Still, gas prices remain high, averaging $4.32 per gallon nationwide, according to AAA.
Just a week ago, the price of a barrel of oil was significantly higher - above $130 - but the price of gasoline was actually lower, at $4.17 nationally.
There is a lag between changes in oil prices and changes in pump prices, and that lag is slower when prices fall.
Why Gas Prices Seem To Go Up Faster Than They Go Down
When oil prices start to rise, you'll see gas prices continue to rise a few days later as stations pass through
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