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Why Are Gas Prices Are Dropping So Fast?

Gas Prices
US Gas Prices. Image Credit: Creative Commons.

Due to a variety of factors, from pandemic-related supply disruptions to Russia’s invasion of Ukraine, gas prices were much higher than usual in the early part of 2022.

The average price even got as high as $5 in June, although they began to decline again after that and continued to do so throughout the summer.

In the fall, gasoline spiked once again, after OPEC+ cut production. 

The high gas prices were expected to contribute to an election wipeout for the president’s party.

However, Republican gains were much less than expected, and the Democrats managed to hold on to the Senate with an additional vote. 

The Great Gas Price Crash of 2022?

In recent weeks, however, gas prices have begun to decline once again, well below the $4 mark. According to GasBuddy’s weekly report, the nation’s average gasoline price fell to $3.21 per gallon as of Monday, representing the fifth consecutive weekly decline. That represents a 56.5-cent decline from the month before, an 11-cent decline from a year before, after most of the year in which the average price was nearly always higher than it was a year earlier. 

“Not only has the decline in gasoline prices lasted five straight weeks, with again every state seeing a weekly decline in its average, but average diesel prices have fallen in 49 states over the last week as well. The relief is saving Americans roughly $20 per fill-up compared to six months ago,”  Patrick De Haan, head of petroleum analysis at GasBuddy, wrote in the weekly report. 

The average price is now below $3 per gallon in 15 of the 50 states, and De Haan predicted that the average price in the entire country will go below $3 by Christmas.

The other weekly report, from AAA, found that the average price had dropped to $3.26 a gallon, a 14-cent drop from the week before. AAA also had an average price below where it was a year ago. 

Per AAA, Montana’s average price dropped 26 cents, California’s fell 25 cents, Alaska’s 24 cents, and Nevada, Oregon, Washington, and Michigan all down by 21 cents from the week before. Texas remains the state with the cheapest average, at $2.69 per gallon, followed by Oklahoma at $2.70 and Arkansas at $2.79. 

“The seasonal pattern of less driving due to shorter days and crummy weather, combined with a lower oil cost, is driving gas prices lower,” Andrew Gross, AAA spokesperson, said in the group’s announcement. “If this trend continues, many states could see their average prices fall below $3 a gallon by early next year.” 

Why the Gas Price Drop?

Why are gas prices continuing to fall? There are a few different reasons for that.

According to The Washington Post, demand for oil and gasoline is dropping worldwide, because there is global fears of recession.

Also playing a part are the continuing coronavirus outbreaks in China

“We’re heading into serious recession in Europe and further economic slowdown in the U.S. as people struggle with high interest rates and worry about their personal wealth and savings,” Ben Cahill, an energy security analyst at the Center for Strategic and International Studies, told the Post. “Add it all up and it creates a bleak picture for oil demand. Prices are reflecting that.”

The news comes amid continuing signs that inflation is beginning to abate. Core CPI rose 0.2 percent in November, compared to 0.6 percent in August and September. 

The average price of gasoline fell as low as below $2 a gallon back in the spring of 2020, as the lockdown phase of the COVID-19 pandemic caused demand for energy to collapse worldwide.

While some may wish to return to the days of $2 gas, they’re likely not eager to return to the circumstances that caused that plummet in prices.

Stephen Silver is a Senior Editor for 19FortyFive. He is an award-winning journalist, essayist and film critic, who is also a contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Written By

Stephen Silver is a journalist, essayist, and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review, and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.