Gas Prices Are Dropping After a Summer of Sticker Shock at the Pump. Here's What You Need to Know. Planning that dream trip has been complicated, but things are looking up.
By Amanda Breen Edited by Jessica Thomas
Many hopeful vacationers have been considering their options this summer — some enthusiastic about their first real chance at travel after more than two years of pandemic-induced lockdowns and restrictions.
But planning that dream trip has been complicated, between exorbitant airfares, rising vacation rental scams, and, of course, increasingly high gas prices.
Fortunately, it seems like things may finally be looking up — because gas prices are going down.
Why are gas prices dropping?
Gas prices have begun to fall in several places across the U.S.
According to AAA, the national average price per gallon is $4.16, down from last month's record of $5.01. Although some states do continue to see higher-than-average prices, 46 states and the District of Columbia have seen declines — and that downward trend may continue.
Why are gas prices going down? Per Reuters, there are a couple of factors at play: a decline in global fuel demand because of the high prices and the strong U.S. dollar upping the cost of oil elsewhere.
Though drops are still expected for the next few weeks, the situation is unpredictable, so take that summer road trip while you can.
Original story below published June 1, 2022.
What is the average U.S. gas price?
Per AAA, the national average for regular gasoline rose by five cents on Wednesday to an all-time high of $4.67 a gallon. That means that, in the past month alone, average gas prices have increased by 48 cents, and a tank of gas now costs 32% more than it did on the day prior to Russia's attack on Ukraine.
Illinois has also become the seventh state to join those with gas price averages at $5 or higher, according to AAA, with New York and Arizona mere pennies from that milestone as well. Georgia now boasts the lowest average gas price at $4.16 a gallon, and California has the highest at $6.19.
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Why is gas so expensive?
The price of gasoline largely boils down to supply and demand, reflecting not only the cost of acquiring and refining crude oil, but also the cost of distribution, marketing and taxes.
Part of the explanation for increasingly high gas prices lies with Russia's invasion of Ukraine. World leaders pursued economic retaliation against Russia back in February, and the impact on crude oil prices was immediate; they reached triple digits for the first time since 2014. The loss of Russia's supply also increases exports from the U.S. and Canadian refineries that typically supply Eastern U.S. gas stations.
"With the cost of oil accounting for more than half of the pump price, more expensive oil means more expensive gasoline," Andrew Gross, a spokesperson for AAA, said in a statement per NBC News. "These prices are creeping closer to those record high levels of early March."
Of course, rising oil prices also contribute to inflation, which was up 8.5% year over year in March — its fastest increase in 40 years.
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How high will gas prices go?
A couple of weeks ago, JPMorgan analysts predicted how much gas prices would climb this summer, and the estimates were far from optimistic. "With expectations of strong driving demand...U.S. retail price could surge another 37% by August," the firm's report states, per CNN.
According to Patrick De Haan, an analyst for Gas Buddy, which tracks fuel costs across the country, the national average gas price could top $5 a gallon as early as June 17. Still, others are hesitant to say the national average will definitely cross over the $6 a gallon mark.
"It's hard to get to $6," Andy Lipow, president of Lipow Oil Associates, told CNN. "Before we get there, we would have significant demand destruction, not only here, but around the world."
Related: 'A Perfect Storm': Average U.S. Gas Price Reaches New High and Continues to Climb
