Gas Prices Fall Below $4 a Gallon. Is the Worst Over?

Daily Trade Alert ^ | 08/12/2022 | by Emma Newbery, The Motley Fool

[SeekAndFind]

Average gas prices fell below the all important psychological mark of $4 a gallon today, according to AAA. Prices have fallen for 58 days in a row now, giving consumers some much needed breathing room.

“Americans today will spend nearly $400 million less on gasoline than they did in mid-June,” said a GasBuddy blog early this week. The GasBuddy app helps customers find the lowest-cost pumps near them. Gas prices peaked at over $5 in mid-June, with customers in some parts of the country paying as much as $6.43 per gallon.

Why are gas prices falling?
Gas prices are the lowest they’ve been since March, mainly because of increased supply and reduced demand. On the one hand, the government is releasing oil from its Strategic Petroleum Reserve. This means that there’s more oil flowing, which in turn pushes prices down.

At the same time, there’s a reduction in demand. Americans are cutting down on gas consumption in a number of ways. In a survey by AAA, almost two-thirds of respondents said they’d changed their habits to use less gas. Driving less and combining errands were the top ways people handled high gas costs.

Finally, global crude oil prices are falling. Prices initially shot up following Russia’s invasion of Ukraine, but in recent months they’ve come back again. The price of crude oil accounts for almost half the price people pay in gas stations.

Is the worst over?
It’s too early to say. GasBuddy’s Head of Petroleum Patrick De Haan thinks prices will continue to decline for a few more weeks at least. But there are several factors that could still reverse the downward trend.

First up, it’s hurricane season. If severe weather conditions hit the Gulf of Mexico (where a large amount of petroleum refineries are located), we’ll see a reduction in supply and a corresponding increase in prices. Given that many refineries are operating at close to full capacity, there isn’t a lot of room for even small hiccups.

Plus demand could increase both in the U.S. and internationally. High prices caused Americans to ease up on the gas, but that may not last if prices continue to fall. Plus, economic activity in China has been muted recently, but this won’t last forever.

Finally, the Russia-Ukraine crisis continues to have an impact, particularly as economic sanctions affect prices. European countries are facing dramatic increases in their energy bills and there are a lot of questions about what might happen before winter.

What it means for consumers
As consumers, the best course of action is to hope prices stay low but plan for possible increases. There are several ways to reduce your gas consumption, some of which a lot of Americans have already adopted. Here are a few you might not have considered:

• Inflate your tires. Inflating your tires can reduce your gas consumption, as can regular maintenance. The U.S. The Department of Energy also says that each 5 mph you drive over 50 mph is like paying an additional $0.29 per gallon for gas.
• Shop around for the best prices. Squeeze every cent out of your petrol purchase by looking for the cheapest gas stations near you. Apps like GasBuddy and AAA can help.
• Collect rewards on your gas spending. You may be able to earn rewards with a gas credit card or a gas rewards app. This can help to slightly offset the high prices.
• Try carpooling or using public transportation. Not only will you reduce your gas costs, it’s better for the environment too. You might also look for ways to offset your costs.

The difficulty is that if prices do go back up, it won’t only impact the price you pay at the pump. Gas prices also impact the price we pay for groceries, and wider cost of living. If you don’t already have an emergency fund, now’s a good time to put some cash aside. Having a financial cushion in the form of extra cash in your savings account could help if prices start to increase again.

[kenmcg]

Typical fake news. This is an election year, of course the criminal administration will get the gas price down before same. But after the election you can bet your bottom dollar that the gas price will go to record levels.

[usconservative]

Nothing has changed vis a vis oil production or refineries.

What has changed is demand destruction finally kicked in as it lags behind. People are driving a lot less, gasoline consumption is at the same level as early on during Covid.

Look at the consumption numbers. It's demand destruction from gas prices being too high for too long.

[MayflowerMadam]

That title/question has to be the stupidest this month. “Is the worst over?”

The “worst” isn’t over just because gas is a few cents cheaper than it was a couple weeks ago.

[Titus-Maximus]

The quantity of demand has been greatly reduced, meaning all your lives have been diminished.

Biden impoverishes people and says things are getting better. No, it means people are doing less traveling with their families.

Their plan was to drive down oil consumption and they accomplished it.

The Green New Deal.

[mewzilla]

It’s not over of the reason for the price decline is demand destruction.

[july4thfreedomfoundation]

I’ve heard the Israelis not so secretly have 200 nukes.

If Taiwan didn’t develop some over the years, they were foolish not to do so.

[nascarnation]

https://en.wikipedia.org/wiki/Vela_incident

[Vaduz]

Daily Trade Alert failed to note California prices $5.40 to $5.90 so much for the propaganda report.

[joma89]

The worst is far from over. Millions of useful idiots continue to vote for the democrat party.

[blam]

"It will shoot back up to over $5 right after the elections in Nov."

That's exactly my first thought.

How can it be otherwise when the whole world has a war against fossil fuels.

[Varsity Flight]

🎓☑️

[Keyhopper]

It’s the election dip.
Fear not, they’ll skyrocket right after the election.

[SuperLuminal]

Fake News Alert!

Here, behind enemy lines in MD, have not seen a single sign of any gas below $4.89...

No price drop is significant until it returns to the $1.99 we paid during the Trump era...

[Wuli]

No.

Lower price will help increase demand, which will start to bring prices back up, and they’ll remain higher than when Biden took office.

[politicket]

Biden will try to spend money like crazy (as if he isn’t already!) to avoid a serious recession or worse

Exactly. During a recession the US government has very little power to stop it from happening. The international banks hold all the chips at the table.

One of the few ways the government can keep pretending things are fine is to encourage its citizens to take on my debt (while promising some sort of tax credit or stipend for doing so).

Remember things like "Cash for Clunkers" back in 2008?

People should ask themselves a question. Why would the government ENCOURAGE new debt in the face of an economic downturn when people are losing their job and businesses are struggling to survive?

It's because a recession is a plunging of the money supply - and our debt-based money supply is simply measured by the total outstanding debt in the nation. The way to prop up the money supply is to encourage new debt.

Our government did this on the backs of are most ignorant populace during the last recession - students.

Student loans went from a total of $400 billion in 2006 to now more than $1.8 TRILLION - just so the government could get new debt issued to keep the economy from collapsing.

Be careful of the market "exuberance" right now. In economics it's known as "The Greater Fool Principle" - or finding a bag holder that thinks the bottom has been hit in the markets and we're on a rocket ride back up.

There are absolutely no indicators globally showing this to be the case. The wealthy are transferring their holdings to those who don't know any better.

[minnesota_bound]

Gas is $5.50 to $6.50 here today in the San Fernando valley.

[Diana in Wisconsin]

Another good tip which makes it less painful at the pump and easier to BUDGET is Dollar Cost Averaging.

I don’t drive as much as I used to, but when I was driving to a job 6 days a week and driving to see my Dad to help care for him, I would fill up on the same day each week. I liked Thursdays for some reason. That way if prices were higher or lower in the course of a month, I would have 4 fill-ups at an “averaged” price to me for pretty much the same amount of gasoline each week.

It something I always did when investing in stocks & bonds, too. Same amount invested each month, whether prices were higher or lower in the market.

[Diana in Wisconsin]

“On the one hand, the government is releasing oil from its Strategic Petroleum Reserve.”

Brilliant strategy there, Brandon! Sell Low, Buy High (when, if ever, we can refill it...at Taxpayer Expense!)

Even a stupid SQUIRREL knows to GATHER nuts for the winter - not GIVE THEM AWAY!