When will gas prices go down?
The heat wasn’t the only thing rising in the summer of 2022. Inflation impacted the cost of food, energy, apparel, and shelter and had consumers paying more for items such as chicken, eggs, and margarine. This increase in price was most evident in gasoline prices, which rose 59.9% between June 2021 through June 2022.
With more people returning to work, and many jobs transitioning from remote work to hybrid or in-office work, consumers are on the road more than they have been since the COVID-19 pandemic began. The increase in fuel costs, along with other inflation-related price hikes, is putting a strain on all of us, and leaving us asking ourselves “when will prices go down?”
According to the federal Energy Information Administration, the cost for each gallon of gas is broken down into four categories: taxes, distribution and marketing, refining, and crude oil.
Data source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update
As shown, the biggest driver of the price of gas is the cost of crude oil and the cost of refining crude oil. Factors related to these increases include the global effects of sanctions on the cost of crude oil related to Russia’s war in the Ukraine; the increased cost of refining oil because many refineries shut down faster than new ones were built, and the return of a demand for refined oil to pre-pandemic levels without the capacity to keep up.
What is being done to lower fuel prices?
Luckily, we are beginning to see oil prices go down nationwide, providing some relief to consumers. In August, the average price of gas per gallon in the United States fell below $4 for the first time in several months. One of the reasons we are starting to see oil prices go down is that people are being more conscientious in deciding when to drive. People are taking fewer road trips; more folks are carpooling; demand is going down. There is a saying that “the cure for high prices is high prices.” When the high price of gas brings the demand down, oil production is able to catch up. As oil reserves are going up, prices are dropping.
We’ve all seen prices rise and fall before, and even though we are starting to see some relief at the pumps, many of us are nervous about what happens next. Will they go back up?
There is a chance the recent dips in gasoline prices will be short-lived. Currently, refining capacity in the U.S. is about a million barrels a day below what it was prior to the pandemic. However, as more people began commuting, traveling, and driving, the result was a sudden high demand for oil. Even with refineries meeting capacity, it is very difficult to keep up with the need. Further, the sanctions related to Russia’s war in the Ukraine are still in place, and their full effects may not yet have been felt.
There are also some wild cards out here. For example, a hurricane in the Gulf of Mexico could knock out drilling rigs or refineries, halting production. With geopolitical threats in Europe and Asia, an economy still recovering from the COVID-19 pandemic, and an upcoming hurricane season, it’s hard to say whether once average prices go down at the pump, they’ll stay down.
Ways to save at the pump
There are more ways to save at the pump than changing driving habits. Here are just a few ideas that can help, as well as some ways to improve your vehicle’s fuel efficiency!
Track local prices
GasBuddy is a site well-known for tracking prices in the US, and provides data for the US Office of Energy Efficiency & Renewable Energy’s gas tracker pages. GasBuddy also has an app available for Android and iOS that finds real-time fuel prices at more than 140,000 gas stations in the United States and Canada.
Fuel rewards programs and cash
Shopping for groceries can also save you on gas costs if you take advantage of fuel rewards perks. Many grocery stores nationwide offer programs where customers can use points earned while shopping to cash in on savings at the fuel pump.
Many gas stations offer credit cards or reward programs that give a percentage of the purchase back to the customer, but many major credit card companies also offer gas rewards credits and don’t limit the customer to a certain gas station brand.
Some gas stations are required to put the credit card price (which includes a surcharge) as the advertised price on their signs. Using cash eliminates the surcharge and allow you to pay below the advertised price.
Check tire pressure
Knowing how to check and maintain your tire pressure not only improves your fuel efficiency, but it is a great preventative and safety measure. Tire pressure can change with the temperature, so it’s a good idea to check yours regularly.
Map your trip
Many GPS apps have an option to choose routes that avoid gas guzzles such as hills or traffic jam. When entering your destination into your app, check for the “fuel-efficient route” option to get you there most efficiently.
Costco, BJs, Sam’s Club, and Walmart Plus all offer discounted gas prices to members, with savings ranging from 5 cents to 25 cents a gallon. These savings can offset the membership cost but be prepared to wait – the lines at these pumps can be long!
The bottom line, inflation has impacted nearly every aspect of our lives. From buying groceries, to filling up our tanks, we are all feeling the strain of higher costs. While it is a relief to see the numbers at the pump going down, it’s hard to say when fuel prices will return to levels we find easier to manage.
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Article last updated on October 27th, 2023 at 12:30 pm