US gas prices rise for the first time in 99 days

US gas prices rise for the first time in 99 days

(CNN) — The historic streak of falling gasoline prices is over.

After sinking every day for more than three months, U.S. gas prices rose – a penny – to $3.68 a gallon on average on Wednesday, according to the AAA.

That ends 98 straight days of falling prices at pumps, the second longest streak on record since 2005.

The last time the national average price of gasoline rose was on June 14, when it reached a record US$ 5.02. Prices have fallen every day since then and Thursday would have marked the 100th straight day of declines.

The drop in gas prices was driven by a number of factors, including stronger supply and weaker demand as motorists balked at high prices and unprecedented emergency oil releases from the White House.

Another major factor that was driving down gas prices: growing concerns of a global recession that could hurt demand for gas. People who lose their jobs don’t have to drive to work, and even those with jobs reduce their spending during recessions.

The strong dollar also helped to lower the price of gas, because crude oil is quoted in dollars. This means that each dollar can buy more oil than it would if the currency’s value were stable or falling. The dollar index, which compares the value of the dollar to major foreign currencies, is up 15% this year. It also means that oil prices are rising faster for countries that don’t use the dollar, which reduces global demand.

At the same time, oil flows from Russia have held up better than feared, despite sanctions and the war in Ukraine. Russia’s invasion of Ukraine and the sanctions that followed helped trigger the sharp rise in oil and gas prices. The average price on the day of the invasion was $3.54 a gallon, slightly lower than today. Russia’s announcement on Wednesday that it would increase its troop deployment helped lift crude oil futures by 2% on global markets.

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What happens next?

Gas prices are likely to remain relatively close to current levels in the near term, said Tom Kloza, global head of energy analysis at OPIS, which tracks gas prices nationally for AAA.

“I don’t think you’re going to see a major move up or down,” he said recently, ahead of Wednesday’s modest price increase. He said competing forces will affect prices in the short term.

US refining capacity remains limited. And OPEC, along with other oil-producing nations, recently agreed to cut production. Both push prices up.

Meanwhile, seasonal factors such as the end of the summer driving season and the annual end of US environmental regulations requiring a cleaner, more expensive gasoline blend during the summer months could help drive prices down. Also pushing prices down: Oil traders remain nervous about the state of the global economy.

“Crude doesn’t have speculative investment money behind it right now,” he said.

Wholesale gasoline futures point to drastically lower gasoline prices through the end of the year, with the possibility that gasoline below $3 a gallon could be common in much of the country by then, Kloza said. But he cautioned that “futures prices are a notoriously bad predictor of what the future will bring.”

$3 gas?

While gasoline below $3 remains rare—only 5% of the 130,000 gas stations in the United States are selling gasoline below that price, according to OPIS—relatively cheap gasoline has become much more common with the months of decline. . Nearly one in four stations nationwide are selling gasoline for less than $3.25 a gallon, and 56% are selling gasoline for less than $3.50 a gallon.

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Cheaper gas was a huge boost to the US economy, easing inflationary pressure and giving Americans extra money to spend. As a typical US household uses about 90 gallons of gasoline a month, the drop in gasoline prices saves these families about $120 a month from what they were paying since the peak in June.

A one-cent rise in gas prices isn’t a significant change for most drivers, and prices could fall again as global economic concerns grow along with fears that demand for fuel will continue to fall.

However, if gas prices start to rise, it could undermine efforts by the Biden administration and the Federal Reserve to keep inflation in check. Falling gas prices are the only reason US consumer prices have remained steady in recent months, after rising sharply in 2021 and earlier this year.


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