Gas prices were supposed to reach $5 next month. Crude oil was headed toward $100 a barrel recently. The price of a gallon of regular gas topped $5 in California and rose $6 in some places there. However, talk about $5 gas has ended. Many more people think gas will drop to $3.
Crude oil was $95 just a few weeks ago. Recently, it was $82. Gas demand has dropped. A reason is that people may be cutting back because of fears of a weak economy. JP Morgan said in a note quoted by Reuters: “All told, fuel prices may be closer to consumers’ pain threshold than inflation-adjusted prices might suggest.”
There are some who think that OPEC+, particularly Saudi Arabia, raised prices too much earlier this year. While they got more dollars per oil, the oil demand slackened. A peace deal with Israel, brokered by the U.S., promises to increase production.
According to the AAA Fuel Gauge, the price of a gallon of regular has already dropped. Today, the figure is $3.72. A week ago, it was $3.83.
GasBuddy’s data show that gas prices are below $3.25 in seven states–Mississippi, Georgia, South Carolina, Louisiana, Alabama, Texas, and Delaware. Some of these have the advantage of supply from huge refineries on the Gulf Coast south of Houston. However, the drop is broad-based on geography.
Low gas prices could help the U.S. avoid sinking into a recession. Last month, gas prices were the fastest-rising component of the CPI. At that rate, America’s lower- and middle-class families who drive a great deal were watching discretionary income fall through the floor. Now, discretionary income could improve before the usually high-spending holiday season.
Gas prices are not the only bellwether for the U.S. consumer economy, but they may be the biggest proxy. (These are the states with the lowest and highest gas taxes.)
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