WASHINGTON—As more areas of the U.S. see pump prices for gasoline fall below $4 a gallon, consumer demand is ticking back up, but fluctuating oil prices and geopolitical risks continue to weigh on the market.
“As the days get longer, the weather gets warmer, and pump prices dip from their record highs, consumers feel more confident about hitting the road,” said Andrew Gross, AAA spokesperson. “But these lower pump prices could be temporary if the global price of oil increases due to constrained supply.”
After slight downward trends over concern about increased global oil prices and the return of seasonal domestic gas demands, gas prices are creeping up again, according to AAA. The current national average for a gallon of gas is $4.10, up a penny from yesterday, but down from $4.26 a month ago. Gas prices were $2.87 a gallon a year ago.
The war in Ukraine and fear of less Russian oil entering the market caused the price of crude to creep back above $100 a barrel yesterday. Brent crude was down $1.41, or 1.2%, to $111.75 a barrel at 10:28 GMT, after rising more than $1 to $114.21 earlier in the session, reports Reuters. U.S. West Texas Intermediate crude fell $1.64, or 1.5%, to $106.57 a barrel, after rising to $108.92 earlier.
Data from the Energy Information Administration shows that total domestic gasoline stocks decreased by 3.5 million barrels to 233.1 million barrels last week. Gasoline demand increased slightly from 8.5 million barrels per day to 8.73 million barrels per day.
“Although supply and demand factors would have typically supported elevated pump prices, the fluctuating oil price continues to be the main factor influencing prices at the pump,” writes AAA. “Pump prices will likely face downward pressure if oil prices remain near $100 per barrel.”
The dollar is trading at a two-year high, reports Reuters. When the dollar is stronger, commodities priced in dollars are more expensive for holders of other currencies, which can dampen demand.
Last week, the White House announced plans to temporarily allow high-ethanol content gasoline to be sold during the summer in an effort to curb high gas prices. The Environmental Protection Agency (EPA) will allow E15 to be sold between June 1 and September 15.
NACS’ most recent blog post “Do Oil Companies Make Money on High Gas Prices?” looks into how much oil companies profit from gasoline sales.
The Convenience Matters podcast episode “What’s the Tipping Point for Gas Prices?” explores the gas price tipping point for consumers and what it means for the summer driving season.
Here’s how to explain to customers why gas prices aren’t dropping quicker when the price of crude oil goes down.