Gasoline prices in the U.S. dropped below $4.50 a gallon for the first time in two months, the AAA reported on Tuesday, amid a global decline in oil price that may offer some relief to American households severely impacted by record inflation numbers.
According to AAA’s tracker, the average price of gasoline across the country stood at $4.495 per gallon on Tuesday.
Just in the last week, average prices in eight states and territories—Washington D.C., Ohio, Texas, Arizona, California, Wisconsin, Oklahoma and Kentucky—have dropped by more than 19 cents.
The slump in prices at the pump comes as the global price of crude oil dropped from nearly $118 a barrel last month to $105.53 on Tuesday.
17. That’s the number of states in which gas prices have dropped more than 50 cents per gallon in the past month, according to Patrick De Haan, the head of petroleum analysis at GasBuddy.
President Joe Biden, whose administration has been under immense pressure to lower sky-high inflation and gas prices, on Monday tweeted: “Gas prices have been dropping for 34 days straight, about 50 cents a gallon. That saves the average driver about $25 a month. I know those extra dollars and cents mean something. It’s breathing room. And we’re not done working to get prices even lower.”
Last week, the Labor Department released data showing annual inflation in the U.S. surged to 9.1% in June—marking the steepest 12-month increase in consumer prices in over forty years. High gas prices were a key driver behind the record inflation with prices rising nearly 10% from May to June. The drop in gas prices may offer some respite from inflation, but experts believe crude oil prices will remain “elevated” as the world deals with supply shocks caused by Russia’s invasion of Ukraine and subsequent sanctions against the country. It’s even unclear how long this decline will last as the global benchmark Brent Crude Oil Futures have now jumped above $105 after dropping below $100 a barrel last week. Biden has attempted to ease the supply crunch by releasing oil from the nation’s strategic reserve. On a recent trip to Riyadh, Biden pushed the country’s de facto ruler Mohammed bin Salman to take “further steps” to increase the global oil supply, something oil exporting countries have not yet committed to doing.
What To Watch For
A key moment in the ongoing global energy crisis is set to take place on Thursday as the deadline for Russia’s planned maintenance of the Nord Stream 1 natural gas pipeline to Germany is scheduled to be completed. There are some concerns among European leaders that Russia may permanently halt gas supplies or simply extend the deadline further as retaliation against sanctions imposed by Europe. German economics minister Robert Habeck has warned that if such a moment does come to pass it could trigger a 2008 Lehman Brothers-style collapse of Europe’s energy sector.
Inflation Rises Again To 40-Year High—But Gas Prices May Help Drive That Down Soon (Forbes)