Here’s why Gas Prices Continue To Drop— How Far They May Fall As Oil Prices Crater


TOPLINE According to AAA data, gas prices decreased two cents on Wednesday to $4.779 per gallon, down 24 cents from its highest-ever recorded level of $5.016 last month. They are expected to continue to decline, but perhaps not quickly enough for President Joe Biden, who has criticized gas stations for maintaining high prices as the crisis continues to hurt his popularity.
On Sunday, a petrol station in Washington was pictured.

A gas station in Washington pictured Sunday.




Gas prices will probably continue to decline after oil prices, which fell by over 8% on Tuesday due to growing recession fears, traded below $100 per barrel for the first time since early May (WTI fell even more on Wednesday, falling.9% to $98.46 per barrel).

The cost of gasoline for Americans is highly correlated with the price of crude oil.

GasBuddy’s head of analysis, Patrick De Haan, stated on Tuesday that if oil prices continue to fall, he anticipates a “possible reduction of 40-65 cents per gallon in the weeks ahead.”


Gas prices would still be far higher than they ever were before 2022, when the previous record of $4.103 per gallon was set. Even if that decline occurs.

Others foresee significant price drops with decreasing oil prices, but not as confidently as De Haan: Without “demand destruction,” according to Tamar Essner, principal of Vectis Energy Partners, gas prices won’t drop below $4 per gallon. David Rundell, partner at Arabia Analytica, disagreed, saying he doesn’t believe prices will “go down anytime soon drastically.”



Although Biden has come under fire for what is perceived to be his inaction on gas prices, which have been a major factor in the United States’ highest inflation since 1981, much of the increase in gas prices can be attributed to Russia’s invasion of Ukraine, which threatens the global energy supply. Last month, Biden called for a temporary suspension of the federal gas tax, which currently stands at 18 cents per gallon. The idea was widely criticized as being an impractical approach to lower prices, and Biden’s offer failed to get support in Congress. American public opinion of Biden’s management of the economy is quite negative. A survey conducted by the Center for American Political Studies at Harvard University and Harris Insight and Analytics last week found that just 32% of registered voters and 28% of those who are concerned about inflation approve of how Vice President Biden is handling the economy, respectively. These numbers are the lowest since he took office.


97.9 percent According to AAA, that is the increase in the national average gallon price since Biden assumed office.



“Bring reduce the price you are charging at the pump to match the cost you’re paying for the product,” wrote Biden in a widely shared tweet on Saturday. And finish it immediately. Many others, including Jeff Bezos, the wealthy creator of Amazon, chastised Biden for misrepresenting the situation—gas stations largely set pricing based on market conditions. In response to Biden’s tweet, Bezos wrote: “Ouch. The White House shouldn’t continue to make statements like this on inflation because it is such a serious issue. Either blatant misinformation is taking place, or fundamental market dynamics are being deeply misunderstood. Bezos has regularly argued with the Biden Administration over its economic policies. According to Forbes’ calculations, he has a fortune worth $139.2 billion, making him the third-wealthiest man in the world.


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