Gas prices drop; relief could be temporary

Gasoline costs in U.S. have fallen for 28 straight days

HOUSTON — Gasoline prices that surged in recent months have reversed course in July, giving consumers a welcome break.

Gasoline was a major reason that U.S. consumer prices were 9.1 percent higher in June than a year earlier, the biggest annual increase in four decades. But now gas prices have fallen 28 days in a row, the longest decline since the collapse in energy demand in early 2020 as the coronavirus pandemic paralyzed the economy. Energy analysts say American consumers are spending $140 million less on gasoline daily than they were a month ago.

The trend could easily reverse, especially if a hurricane knocks out a refinery on the Gulf Coast, since global oil supplies remain fairly tight. But for the moment, the nation’s inventories are slowly growing, in part because of continuing releases of oil by the government from its strategic oil reserves and reduced consumption.

The average national price per gallon of regular gasoline Wednesday was $4.63, a drop of more than 2 cents from Tuesday, according to the AAA auto club. Prices have fallen 15 cents over the past week and 38 cents from four weeks ago, when the average price climbed to more than $5 a gallon.

The descent has been particularly sharp in Texas, Ohio, Illinois and California, all economically important states, where prices have fallen by 16 cents or more over the past week.

President Joe Biden was quick to herald the reduction in gas prices because their rise has been a political hazard for him.

“In the past 30 days, the average price of gas has dropped by 40 cents a gallon,” he said on Twitter. “That’s breathing room for American families.” Noting oil prices had declined more rapidly than fuel prices, he urged oil companies to pass on their savings to consumers.

Gasoline prices are particularly important for lower-income families, who generally drive longer distances to work and own older, less efficient vehicles. But prices at the pump also frame consumers’ perceptions of inflation more widely because they observe the ups and downs on street corners every day.

Fuel affects the prices of all goods that are shipped, particularly food. Profits of farmers, construction companies and airlines depend heavily on fuel costs, particularly diesel and jet fuel, which are declining but at a slower pace than gasoline. The national average price for diesel, $5.61 a gallon, is 16 cents lower than it was a month ago.

The fall in prices at the pump has followed a slump in global oil prices, which have been dropping over the past month amid growing signs that the world economy is slowing.

Patrick De Haan, head of petroleum analysis at GasBuddy, a Boston company that tracks fuel prices, said the trend of lower gasoline prices could continue for a fifth week as long as oil prices — which have fallen below $100 a barrel — did not surge above $105.

“We’re not completely out of the woods yet,” De Haan said. “There remains the risk of a spike in prices that could send us to new record levels in August should any disruptions occur. It could be a wild ride, but for now, the plummet at the pump shall continue.”