U.S. News Gas prices keep falling, but experts say lower cost...

Gas prices keep falling, but experts say lower cost could help push them back up

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Aug. 16 (BP) — The cost of gasoline keeps falling in the United States during what’s normally supposed to be a busy summer driving season, but experts say the lower prices may lead to more cars on the road and possibly an uptick in prices at the pump.

The national average on Tuesday was $3.95 per gallon, according to AAA, which is a slight decline from Monday. The mark is 8 cents less than it was a week ago and down about 60 cents from a month ago. It remains, however, about 77 cents higher than the average a year ago.

A few days ago, the national average dropped below $4 per gallon for the first time in five months and prices have been on a steady decline for about two months after hitting an all-time high of $5.02 per gallon in the middle of June.

Experts say there are a few factors in the declining prices — and one of the most influential has been lower demand. However, if the lower prices motivate more drivers to hit the road, experts say the cost of gas could soon rise again.

“Falling pump prices may eventually lead to more drivers hitting the road again,” AAA spokesperson Andrew Gross said in a statement Monday. “But that hasn’t happened yet. Instead, many drivers are waiting for prices to fall further before reverting to their typical driving habits.”

Some of the credit for the decline at the pump is owed to President Joe Biden, who took multiple steps to control spiking prices. Earlier this year, he authorized the release of 180 million extra barrels of oil from the national strategic reserve and signed a waiver to allow sales of E15 during the summer months.

Falling gas prices have come at a time of unprecedented prosperity among the major oil companies. Exxon and Chevron both posted record revenues and profits for the second quarter. File Photo by Gary I Rothstein/BP

E15 is a gasoline blend that contains more ethanol and improves fuel efficiency. Under federal law, it’s banned during the summer months because the increased ethanol allows the gasoline to evaporate more quickly in warmer temperatures and worsens air pollution.

Biden also called for a temporary gas tax holiday, which would have shaved off an additional 18 cents per gallon — but there wasn’t enough support for that idea in Congress, even among some Democrats. Gas taxes help pay for things like road repairs and maintenance.

On Tuesday, California had the most expensive gas in the nation ($5.35), followed by Hawaii ($5.34) and Nevada ($4.94), according to AAA. The least expensive gas is found in Texas ($3.45), Arkansas ($3.46) and Tennessee ($3.49).

Another prime factor in the cost of gasoline, naturally, are oil prices. During Monday trading, the cost of oil fell to its lowest point in six months as investors became more skeptical about the future of the world economy amid higher inflation.

Oil markets were sinking again early on Tuesday, with West Texas Intermediate down almost 3% and Brent crude down to just over $93 per barrel.

The decline in gas prices has led to speculation that they might keep falling and potentially sink to $3 per gallon, or lower, by the end of 2022. Other factors like the ongoing war in Ukraine, which has disrupted global energy markets, and a shift in demand would likely make an impact.

Earlier this month, OPEC voted to increase oil production slightly for September. The vote was largely a symbolic gesture, however, as the cartel was said to be weighing U.S. demand against Russia’s insistence on keeping prices high to make up for diminished oil supplies as the war drags on.

The falling gas prices have also come at a time of unprecedented prosperity among the major oil companies. Exxon and Chevron both posted record revenues and profits for the second quarter. It remains to be seen how the decline in gas prices are affecting the oil companies’ earnings in the third quarter, which covers July, August and September.

Biden visited Saudi Arabia about a month ago in an effort to renew relations and push for more oil production. No noteworthy agreements, however, came out of the high-level meeting.

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