Gas Races Down Toward $3

Nirian / iStock via Getty Images

Gas prices were supposed to reach $5 next month. Crude oil was headed toward $100 a barrel recently. The price of a gallon of regular gas topped $5 in California and rose $6 in some places there. However, talk about $5 gas has ended. Many more people think gas will drop to $3.

Crude oil was $95 just a few weeks ago. Recently, it was $82. Gas demand has dropped. A reason is that people may be cutting back because of fears of a weak economy. JP Morgan said in a note quoted by Reuters: “All told, fuel prices may be closer to consumers’ pain threshold than inflation-adjusted prices might suggest.”

There are some who think that OPEC+, particularly Saudi Arabia, raised prices too much earlier this year. While they got more dollars per oil, the oil demand slackened. A peace deal with Israel, brokered by the U.S., promises to increase production.

According to the AAA Fuel Gauge, the price of a gallon of regular has already dropped. Today, the figure is $3.72. A week ago, it was $3.83.

GasBuddy’s data show that gas prices are below $3.25 in seven states–Mississippi, Georgia, South Carolina, Louisiana, Alabama, Texas, and Delaware. Some of these have the advantage of supply from huge refineries on the Gulf Coast south of Houston. However, the drop is broad-based on geography.

Low gas prices could help the U.S. avoid sinking into a recession. Last month, gas prices were the fastest-rising component of the CPI. At that rate, America’s lower- and middle-class families who drive a great deal were watching discretionary income fall through the floor. Now, discretionary income could improve before the usually high-spending holiday season.

Gas prices are not the only bellwether for the U.S. consumer economy, but they may be the biggest proxy. (These are the states with the lowest and highest gas taxes.)

Sponsored: Want to Retire Early? Here’s a Great First Step

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.