US gas prices are falling again, bringing some relief to drivers who are now paying a little less to fill up their tanks.
The national average gas price Monday was about $3.44, according to AAA. That’s about 9 cents lower than a week ago, the biggest weekly drop the auto club has recorded in 2024. Monday’s average was also more than 19 cents less than a month ago and more than 14 cents below the observed level. this time last year.
Why the recent drop in pump prices? Industry analysts point to a combination of sluggish demand and strong supply, as well as relatively moderate oil prices around the world.
Here’s a rundown of what you need to know.
Why are gas prices falling?
There are several factors contributing to today’s drop in gas prices. First, fewer people can travel.
“The demand is fairly shallow,” said AAA spokesman Andrew Gross, pointing to trends seen over the past year and potential lingering effects of the COVID-19 pandemic. “Traditionally – before the pandemic – after Memorial Day, demand would start to pick up in the summer. And we just don’t see it anymore.”
Last week, Energy Information Administration data showed U.S. gasoline demand fell to about 8.94 billion barrels per day. That may still sound like a lot, but before the pandemic, consumption at this time of year was closer to 10 billion barrels a day, Gross noted.
Beyond pandemic-related impacts, experts say, high gas prices seen since Russia’s 2022 invasion of Ukraine and persistent inflation may have caused many Americans to change their driving habits. Other contributing factors could be the increase in fuel-efficient cars as well as electric vehicles on the road today, Gross said.
Some of this is still seasonal. Patrick De Haan, head of petroleum analysis at GasBuddy, noted that gas prices typically decline in early summer due to refinery capacity. At this time of year, many of the factors that drive up prices in late winter and early spring, such as refinery maintenance, are no longer in effect this time of year, he said.
“Once refinery maintenance is completed, the output or utilization of the country’s refineries increases and this helps increase supply,” De Haan said. And that increase in supply, coupled with weaker consumption, has led to a “slightly more noticeable” decline in prices this year. He added that U.S. refinery utilization is at one of the highest levels since the pandemic.
Additionally, the Biden administration announced last month it would release 1 million barrels of gasoline, or about 42 million gallons, from the Northeast reserve in an effort to lower prices at the pump this summer. But De Haan noted that such actions have little impact nationally—42 million gallons equals less than three hours of daily U.S. gas consumption.
“Indeed, what we are seeing now in the form of (declining) gasoline prices … was driven primarily by a seasonal and predictable economy,” he said.
What about oil prices?
Experts also point to a decline in oil prices. Prices at the gas station vary greatly for crude oilwhich is the main ingredient of gasoline.
West Texas Intermediate crude, the U.S. benchmark, has hovered around 70 cc a barrel in recent weeks, closing below $78 a barrel on Monday. That’s “not a bad place to be,” Gross said, noting that oil typically would have to rise above $80 to put more pressure on oil prices.
Oil prices can be volatile and difficult to predict because they are influenced by many global forces. This includes production cuts by OPEC and allied oil-producing countries that have already previously contributed to rising energy prices.
OPEC+ recently announced plans extend three different sets of cuts a total of 5.8 million barrels per day, but the alliance also set a timetable for restoring some production, “which is probably what caused the bearish reaction in oil prices,” De Haan said.
Could prices rise again?
The future is never promised. However, unless there are major unexpected disruptions, prices could continue to decline, Gross and De Haan said.
This time of year, experts are especially alert to the risk of hurricanes, which could cause significant damage and shut down oil refineries.
“Prices are driven by fear,” Gross said. In the U.S., he added, concern is particularly heightened when a hurricane reaches the Gulf of Mexico – and even if it ultimately doesn’t make landfall, refineries may shut down out of an abundance of caution. Exposure may also vary by region.
But barring any surprises, analysts like De Haan expect the national average to remain between $3.35 and $3.70 per gallon. Gas prices typically drop further in the fall, and it’s possible we could see the national average drop below $3 in late October or early November, he said.
Which states have the lowest gas prices today?
While gas prices are generally falling across the country, some states, of course, consistently have average prices lower than others due to factors ranging from nearby refineries to local fuel needs.
As of Monday, Mississippi had the lowest average gas price at about $2.94 a gallon, followed by $2.95 in Oklahoma and just under $2.97 in Arkansas, according to AAA.
Meanwhile, California, Hawaii and Washington had the highest average prices on Monday, at about $4.93, $4.75 and $4.41 per gallon, respectively.