American Gas Prices May Drop by 50%

By Douglas A. McIntyre Published Sep 8, 9:15AM EDT

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The average price of a gallon of regular gasoline in America is falling.
The benefit to many Americans in a time of rising inflation will be significant.

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American Gas Prices May Drop by 50% — © amstockphoto / iStock via Getty Images

In July 2022, the average price of a gallon of regular gasoline in America reached $5.01. That was mostly due to refinery costs and Russia’s invasion of Ukraine. Yesterday, that price nationwide was $3.20. It has even dropped to less than $2.80 in several states near the huge refineries near the Gulf of Mexico. In Mississippi, the price has fallen below $2.70.

OPEC+ will increase output next month. The group of eight countries is the world’s largest oil producer. The alliance includes Russia, which has the seventh-largest oil reserves in the world. OPEC leader Saudi Arabia ranks second after Venezuela.

The price of a barrel of benchmark West Texas Intermediate crude has dropped below $62. In January, it was $80 a barrel. The U.S. Energy Information Administration (EIA) forecasts the figure could go as low as $50 this year. In March 2022, the price of crude briefly reached $120.

Oil prices are 52% of gasoline prices, according to the EIA.

The gas price benefit to many Americans will be significant. For the average family, gasoline is 4% of a household budget. For lower-income families, that rate can double. Fuel prices as a percentage of the consumer price index (CPI) have declined for over a year and continue to do so. When the July CPI was released, gas prices were 9% lower than the same month a year ago.

The gas price drop comes at a critical time, when inflation of other items may rise quickly. Tariffs will increase the prices of some items. The Yale Budget Lab expects inflation will rise “1.8% percent over the short term.”

Also, Americans weighing ownership of EVs will get a price break. The average price for a new EV is over $55,700. According to Kelly Blue Book, three months ago, “the average transaction price of a new EV was $57,734, while the average price for a gas-powered vehicle was $48,799—a nearly $9000 difference.” Low gas prices, therefore, are only part of the savings.

Gas prices are headed toward $2.50, or half of what they were in June 2022.

Avoid These States with the Highest Gas Taxes

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.