Gasoline prices are falling — for now

185

That’s because retail gas prices peaked nationally on Sept. 18 and started moving lower. Data from the American Automobile Association Sunday showed the average price at $3.847 a gallon, down from $3.851 on Saturday and $3.881 on Sept. 18.

It may not be a lot, just 3.4 cents a gallon. But more could be coming. Gasoline demand generally falls in the fall and into the new year because the vacation season is over and the weather in the Northern Hemisphere is cooling. Prices fall and then rise again starting in the spring ahead of summer.

Last year shows what we mean.

AAA data showed the national price at $3.678 a gallon on Sept. 18, 2022. It rose a bit until mid-October and fell to $3.195 on Dec. 31. That was down 13% from Sept. 18, and off 36.3% from the 2022 peak of $5.016 on June 14.

The decline reflected a massive drop in the price of crude oil from June 2022 through Dec. 31, 2022, as the global economy woke up from the COVID-19 pandemic and, then, supplies surged.

For the record, Sunday’s retail gas price was still 23.3% lower than that 2022 peak.

Oil prices may be lower, but, like gasoline prices, they are still high relatively speaking.

West Texas Intermediate crude, the benchmark U.S. crude, settled at $90.03 per 42-gallon barrel on Friday, up 40 cents on the day, a penny on the week, and 12.2% on the year.

Global prices have moved higher because Saudi Arabia and Russia have been limiting production to generate more revenue. Saudi Arabia needs to finance social improvements. Russia needs the revenue to finance its war with Ukraine.

As usual, prices vary from state to state. The highest prices on Sunday were in California with a state average of $5.817 a gallon. Mississippi still has the lowest statewide average: $3.273.

Prices vary so much because of the taxes or fees that state and local governments add to the price of the actual fuel.

Crude oil represents only around 50%-to-55% of the national average gas price. The rest is refining costs, marketing, shipping, and taxes.