Inflation Pinch, EVs Cited as Gas Prices Drop Despite Summer Travel Season

Gas prices are unusually falling during the summer, typically a peak travel season. The average cost of regular unleaded gasoline in the U.S was $3.44 per gallon, a decrease from previous weeks and months.

Decreased gasoline demand and stabilized oil prices contribute to this decline. Americans are traveling less, with daily gasoline consumption dropping to 8.94 billion barrels from 10 billion barrels the previous year. The rise in hybrid and electric vehicle usage also plays a role.

Additional factors include the Biden administration releasing gasoline from reserves and a drop in crude oil prices, which fell below $78 per barrel. Despite these declines, oil prices remain volatile due to global factors such as OPEC's production cuts.

People are shocked to learn that gas prices are really falling around the country during this time of year, even though they generally rise during this season.

The average cost of regular unleaded gasoline in the U.S. was $3.44 a gallon on Monday, according to AAA. This is a decrease of roughly 9 cents from one week ago. According to the vehicle club, that is a decrease of 19 cents from one month ago and a decrease of 14 cents from one year ago.

Energy experts claim that while oil prices have stabilized and the demand for gasoline has declined, gas prices are on the down. This is an unusual set of circumstances for the summer, when gasoline usage typically increases as more Americans travel by car for vacation.

Americans Reduced Their Travel

Gasoline demand dipped to around 8.94 billion barrels per day last week. This is down from 10 billion barrels needed at the same time last year, according to the U.S. Energy Information Administration (EIA). 

According to one analyst, Americans don't seem to be traveling as much as they once did, which may be contributing to the decline in gasoline consumption.

Undoubtedly, Americans' wallets are getting tighter owing to sticky inflation, which is causing a lot of customers to adjust their spending patterns. Analysts claim that the number of drivers opting for hybrid or electric cars has caused the demand for gas to decline.

Given that oil firms are now using their summer mix of gasoline, which is specially made to not evaporate as rapidly in warmer temperatures, the decline in gas prices is especially noteworthy. Refineries create more than 14 types of summer mix because to various state laws, which lengthens the production process and increases expenses.

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Other Elements Driving the Price Drop

However, there are more considerations involved. The Biden administration said last month that it will release one million barrels of gasoline, or around 42 million gallons, from a stockpile in the Northeast in an attempt to lower the cost of fuel.

Experts also mention the expenses of cooling oil. The main ingredient in gasoline, crude oil, has a big influence on pump costs. West Texas Intermediate, the benchmark for U.S. oil, finished at less than $78 per barrel on Monday after spending many weeks in the mid-$70s.

Because oil prices are influenced by a variety of global factors, they may be unpredictable and volatile. This includes the oil-producing countries' production cuts enforced by OPEC and its allies, which have historically resulted in higher energy prices.

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