Fuel Prices Drop as Demand Dips, but Relief Could Be Temporary
Drivers may fill up more as the summer driving season gets in full swing.
WASHINGTON, D.C. — U.S. drivers experienced some relief from high fuel prices over the last week, as the national average for a gallon of regular gas fell eight cents to $4.80. The primary cause was a drop in demand, as fewer drivers fueled up in the past two weeks.
However, experts cautioned the summer driving season kicking off in earnest could drive gas prices back up.
"Domestic gasoline demand dipped recently, which took some of the pressure off of pump prices. About 80 percent of stations are now selling regular for under $5 a gallon," said Andrew Gross, AAA spokesperson. "But July is typically the heaviest month for demand as more Americans hit the road, so this trend of easing prices could be short-lived."
The current national average is 4 cents less than a month ago and $1.67 more than a year ago, according to AAA.
Per the most recent data from the U.S. Energy Information Administration (EIA), gas demand sits at 8.93 million barrels per day, which is lower than the rate of 9.11 million barrels per day reported at the end of June 2021. Conversely, total domestic gasoline stocks increased by 2.6 million barrels to 221.6 million barrels.
Decreasing crude oil prices have combined with this supply and demand dynamics to push prices at the pump down. Drivers are likely to continue to see relief at the pump if these trends continue, AAA reported.
The top 10 largest weekly decreases in the United States took place in Texas (13 cents per gallon), Delaware (13 cents), Arizona (12 cents), Illinois (12 cents), Indiana (12 cents), Ohio (12 cents), South Carolina (11 cents), Florida (11 cents), Virginia (11 cents) and Maryland (10 cents).
The nation's top 10 least expensive markets are South Carolina ($4.29 per gallon), Georgia ($4.30), Mississippi ($4.31), Louisiana ($4.35), Arkansas ($4.35), Texas ($4.39), Alabama ($4.39), Tennessee ($4.41), North Carolina ($4.43) and Oklahoma ($4.50).
At the close of the formal trading session on July 1, West Texas Intermediate increased by $2.67 to $108.43 as the price of crude oil increased based on market optimism that demand will stay robust all summer.
At the same time, crude oil prices faced strong resistance amid broad market concern about the possibility that economic growth may slow or stall due to rising interest rates and inflation. If market concerns persist, this could send crude oil prices lower; a lower-than-expected economic growth rate could cause crude demand to decline, leading prices to follow suit, AAA stated.
The EIA also reported that total domestic crude stocks decreased by 2.7 million barrels to 415.6 million barrels over the last week, dropping to nearly 37 million barrels lower than at the end of June 2021.
As government officials continue to seek ways to give drivers relief, several states have enacted temporary measures. Last month, 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.