In July 2022, the average price of a gallon of regular gasoline in America reached $5.01. That was mostly due to refinery costs and Russia’s invasion of Ukraine. Yesterday, that price nationwide was $3.20. It has even dropped to less than $2.80 in several states near the huge refineries near the Gulf of Mexico. In Mississippi, the price has fallen below $2.70.
OPEC+ will increase output next month. The group of eight countries is the world’s largest oil producer. The alliance includes Russia, which has the seventh-largest oil reserves in the world. OPEC leader Saudi Arabia ranks second after Venezuela.
The price of a barrel of benchmark West Texas Intermediate crude has dropped below $62. In January, it was $80 a barrel. The U.S. Energy Information Administration (EIA) forecasts the figure could go as low as $50 this year. In March 2022, the price of crude briefly reached $120.
Oil prices are 52% of gasoline prices, according to the EIA.
The gas price benefit to many Americans will be significant. For the average family, gasoline is 4% of a household budget. For lower-income families, that rate can double. Fuel prices as a percentage of the consumer price index (CPI) have declined for over a year and continue to do so. When the July CPI was released, gas prices were 9% lower than the same month a year ago.
The gas price drop comes at a critical time, when inflation of other items may rise quickly. Tariffs will increase the prices of some items. The Yale Budget Lab expects inflation will rise “1.8% percent over the short term.”
Also, Americans weighing ownership of EVs will get a price break. The average price for a new EV is over $55,700. According to Kelly Blue Book, three months ago, “the average transaction price of a new EV was $57,734, while the average price for a gas-powered vehicle was $48,799—a nearly $9000 difference.” Low gas prices, therefore, are only part of the savings.
Gas prices are headed toward $2.50, or half of what they were in June 2022.
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