Here’s a sight for voters’ sore eyes: almost $4 in gas.
The average gas price is on track to fall below that threshold for the first time since July, pushed down by seasonal factors that reduce demand.
The national average price for a gallon of gasoline Monday morning was about $4.01, according to AAA data. That’s a drop of about 14 cents since Election Day, when it was $4.15 a gallon, and a drop of 36 cents, or just over 8 percent, from a month ago, when the price was about $4.37.
In 26 states, the average price is already below $4, with North Carolina having the lowest average at $3.26.
Few issues were more important to voters this year than the cost of living, and high gas prices were a key and visible part of those concerns. A CNN poll conducted from October through Election Day showed that 87 percent of voters were at least somewhat concerned about high gas prices, with six in 10 saying they were “very concerned.”
But experts warn Americans shouldn’t expect gasoline to come anywhere near It’s not long before Iran’s pre-war level of $2.98 per gallon is expected, not to mention the price of gasoline, below $2 per gallon, promised by President Donald Trump during the 2024 election campaign.
Two seasonal factors have contributed to lower gasoline demand: the end of the summer driving season and daylight saving time. Americans drive less when it’s dark, so earlier darkness means fewer miles on the road. And with increasingly earlier sunsets through December 21, demand will continue to calm down.
Yet these factors don’t have as much impact on diesel and jet fuel, which typically remain in higher demand during colder seasons. Diesel is used for trucking and agricultural equipment and is also the same commodity as home heating oil. Meanwhile, U.S.-based airlines are reporting a strong appetite for travel through the end of the year.
Diesel and jet fuel prices remained much closer to their peaks. Diesel prices hit a record $6.52 on September 22 and have only fallen about 5% since then. Jet fuel spot prices fell about 2% during the same period.
The average price of gasoline, meanwhile, fell about 10% over the same seven-week period.
This increased demand for diesel and jet fuel allowed oil refineries to operate at maximum speed, which in turn benefited gasoline. A single barrel of crude oil is transformed into a myriad of products, including diesel, jet fuel and gas, meaning increased production has also increased gasoline supplies.
“(Refineries) are operating at a higher utilization rate than this time last year to produce all the jet fuel and diesel fuel they can, which makes gasoline a true byproduct, contributing to higher inventories,” said Andy Lipow, president of Lipow Oil Associates.
Gas could stay below $4 a gallon for the next few months, even without a lasting truce in the Iran war, Lipow said.
But even if a truce comes to fruition, gas prices could remain well above $3 a gallon for the foreseeable future. This is due to the more lasting damage caused to global refining capacity by the fighting in Russia and the Middle East.
“There are 7 million barrels per day of refined product production capacity that have been destroyed by drones or missiles, and that is unlikely to come back anytime soon,” said Tom Kloza, an independent oil analyst and adviser to Gulf Oil.
As a result, gasoline prices could exceed $4 a gallon next spring — a move that is likely to agitate Americans again. A survey released by AAA in 2022 found that $4 gas is considered a tipping point for drivers, with 59% of respondents saying they would change their lifestyle or driving habits if prices rose to that level.
“People might say at Christmas cocktails, ‘Oh, I only paid $3.50 a gallon today,'” Kloza said. “But be careful next spring, we will go much higher.”
Longer term, prices could come under increased upward pressure as oil companies catch up on the maintenance of their refineries. ExxonMobil CEO Darren Woods told investors earlier this year that the company had deferred maintenance, which helped maintain production and profitability. But these postponements can’t last forever, meaning prices could rise as refineries cease operations.
Kloza says big oil companies are talking privately about how 2027 will be “the mother of all refinery maintenance years.”
Another factor that could keep gas prices high, Kloza added: Gas station owners are recalibrating their prices.
The final price Americans pay at the pump is set by thousands of gas station owners, who base their prices on the wholesale prices they pay, while taking into account the prices of nearby competitors.
During a spike in wholesale gasoline prices, some station owners will actually absorb a temporary loss of profits, even if their customers see a rapid increase in prices, so as not to lose business to rival stations that might have purchased gasoline before the last wholesale price hike.
But when wholesale prices fall, as they have recently, station owners are often slow to lower their prices as they try to recoup losses incurred during periods of rising prices. This reinforces the industry maxim that “prices go up like a rocket but down like a feather.”
Kloza said the recent price decline has been quite rapid by historical standards.
“It’s still a feather, but it’s more of a wet feather,” he said.
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