In June, as oil prices increased above $100 a barrel, the price of the average gallon of regular gas nationwide surged to over $5. It was the first time in history, gas passed that $5 barrier. The threat that the war in Ukraine might drive up oil even more created anxiety that gas prices had not reached the top. However, oil prices have moved in the other direction, and in one state, the average price of a gallon of gas is below $3. The price per gallon in Texas is $2.94.
Texas is not the only state where gas prices have fallen near the $3 price point. Gas in Mississippi costs $3.07. In Georgia, it is $3.10, and in Arkansas and Louisiana, it is $3.11.
The trend in oil prices means that gas may drop to $3 in several states. Crude oil prices have dropped to $80 and have fallen most days since the start of November. A recession may have already started, which has moved global demand downward. Crude consumption in China, the world’s largest oil importer, has demonstrated this. According to the FT, “Oil prices fell sharply in the week as mounting concerns about weakening fuel demand in China outweighed fears that Russian supply could drop next month when tighter EU sanctions on its crude exports come into force.”
The news offers a great deal of relief to Europe. Oil imports from its regular supplier, Russia, were cut off due to the war in Ukraine. Gas prices have skyrocketed. Worse, the price of heating oil has risen sharply. Some people may still struggle financially to heat their homes.
When they were at $5, gas prices in the U.S added to the case there would be a deep recession. Those prices will no longer be a significant contributor to economic distress in the America
Gas prices by state tend to be driven by two factors. One is proximity to oil refineries. States close to the Gulf of Mexico and the huge refineries near Houston have an advantage.
The other factor is state gas taxes. According to the American Petroleum Institute, the U.S. average of gas taxes by state is $.5709. In Texas, one of the states where the figure is the lowest, the gas tax is $.3840 per gallon.
Travel by car always picks up around Thanksgiving. This year, consumers will get some gas price relief. This will be particularly true in Texas and a few other states where gas prices have collapsed.
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