Drop in Global Oil Price Provides Some Relief at the Pump
Fears of recession lead to lower prices for crude oil.
WASHINGTON, D.C. — Drivers can breathe a little easier when they pull up to the fuel pump.
As the global price of oil dropped for the second week in a row, the U.S. national average for a gallon of regular gas declined to $4.89 as of June 27.
The current national average is 9 cents less than one week ago, 30 cents more than one month ago, and $1.80 more than one year ago.
The price for a barrel of crude oil fell from $110 to $107 on the week as economic fears of a potential global recession led to less demand for oil, reported AAA.
"Fear is not a good reason to move a market like the one for oil, but it is a powerful motivator," said Andrew Gross, AAA spokesperson. "The cost of oil accounts for nearly $3 for every $4.89 at the gas pump. Consumers should find more relief when fueling up if oil prices drop further."
More detailed analysis from AAA was prevented by the lack of a vital gas price indicator, according to the outlet. The U.S. Energy Information Administration (EIA) stated it was delaying the release of gasoline demand data due to "systems issues." Demand data indicates whether drivers are fueling up or not, which may be reflected in higher or lower gas prices.
This cautiously good news comes two weeks after the U.S. national average hit an all-time high of $5.01 per gallon in the midst of the summer driving season, which typically drives up demand. At this time, the cost of a barrel of crude oil was more than $120, nearly double the price compared to August 2021.
The top 10 largest weekly decreases in the U.S. took place in: Florida (15 cents per gallon), Wisconsin (13 cents), Delaware (13 cents), Indiana (12 cents), South Carolina (11 cents), Ohio (11 cents), Kentucky (11 cents), Texas (11 cents), Washington, D.C. (11 cents), and Michigan (11 cents).
The nation's top 10 least expensive markets are Georgia ($4.40 per gallon), Mississippi ($4.41), South Carolina ($4.42), Louisiana ($4.44), Arkansas ($4.44), Alabama ($4.49), Tennessee ($4.51), North Carolina ($4.53), Texas ($4.54), and Oklahoma ($4.56).
As government officials continue to seek ways to give drivers relief, several states have enacted temporary measures. On June 1, New York State temporarily suspended its excise tax and state sales tax on gasoline and diesel, reducing the tax burden on a gallon of motor fuel by 16 cents.
At the close of the formal trading session on June 24, West Texas Intermediate increased by $3.35 to settle at $107.62. Crude oil prices previously strengthened at the end of the week due to positive market sentiment based on the stock market rallying, but prices dropped earlier in the week in the midst of broad market concern about the potential that economic growth could slow or stall due to rising interesting rates and inflation, AAA reported.
A lower-than-expected economic growth rate could prompt demand for crude to fall, with prices following thereafter. This week, crude prices could decline if the EIA's reporting indicates a large increase in total domestic stocks, the association added.