American motorists have been enjoying much-needed relief at the gas pump for about two months now, which has long relieved their long-standing frustration.
Gas prices have fallen for more than fifty days in a row and are expected to drop by about 20% from June's all-time high of $5.02 per gallon. According to AAA data, the average national price for a gallon of gas dropped to $4.11 on Friday. Prices have fallen by a significant 10 cents per gallon since Monday.
Price action that is even more favorable could still come. Gas prices are expected to drop below $4 per gallon in the upcoming days, according to Gas Buddy's head of petroleum analysis, Patrick De Haan. "[I]n ~100 hours, we will see the national average fall to $3.99 per gallon, the lowest and first time since March 5," he tweeted on Twitter on Thursday. "A handful of stations in the US could even fall to $2.99/gal by then."
According to Ellen Wald, a senior scholar at the Atlantic Council, Americans are reducing their driving to deal with the current strong inflationary pressures, which is one of the main causes of the price declines at the pump. She told CBS News, "We have seen some of what we call demand destruction-people choosing not to buy gasoline because it's so expensive." There are "fears we could be entering a global recession, [and that] could be driving prices down."
Similar sentiments were conveyed by AAA representative Andrew Gross. He said in an interview with Fox Business that consumers appear to be taking the pressure off their wallets by fueling up less." And if the price of oil does not surge globally, there is reason to be cautiously confident that pump prices will continue to decline. However, the entire environment is still quite unstable.
Gas demand decreased last week from 9.25 million b/d to 8.54 million b/d, according to new Energy Information Administration (EIA) data. In keeping with general demand at the end of July 2020, when Covid-19 limits were in effect nationwide, the rate is 1.24 million b/d lower than the previous year, as per AAA.
The EIA also reports a small increase in total domestic gasoline stockpiles. To reach 426.6 million bbl last week, the overall domestic crude stockpile grew by 4.5 million bbl.
"Drivers will likely continue to see pump prices decrease," AAA stated in a release. "If gas demand remains low and stocks continue to rise alongside falling crude prices." It went on to say that "the sharp inventory increase during the usually high-demand summer driving season signals low demand could continue pushing prices lower."