A few weeks ago, most people would have been happy to hear that gas prices had dropped significantly. But now that it’s happened, most likely won’t be so happy about why.
The average gas price in the United States dropped this week, for the third week in a row, this time falling 3.4 cents, to $3.379 per gallon. The reason for the drop was the drop last week in the price of oil, which was brought about by concerns over the Omicron variant, which was identified last week in South Africa.
Just as the original arrival of the coronavirus pandemic caused demand, and therefore oil and gasoline prices, to plunge in 2020, the fears of Omicron caused another drop last week, although not nearly to the degree of 2020’s decline. And if the Omicron fears prove unfounded, it’s very possible the decline in gas prices will be short-lived.
“Gas price declines are slowly picking up momentum,” Patrick De Haan, head of petroleum analysis for GasBuddy, said in a blog post on Monday. “With oil’s recent fall and the jury out on a new Covid variant, Omicron, we could be in store for lower prices based on many countries turning back to travel restrictions, limiting oil demand and potentially accelerating the drop in gas prices.”
Despite the decline, the average price is up 2.8 cents from a month earlier and is $1.30 per gallon higher than at the same time a year ago.
“There remains a very high level of uncertainty ahead of us as OPEC has also delayed its meetings to await more market movements and information on Omicron,” DeHaan added, in the blog post. “But so far, Americans can expect the new variant to push gas prices even lower. Beyond the next few weeks, it remains nearly impossible to predict where oil and gas prices will head, though turbulence is guaranteed.”
Also last week, the Biden administration announced plans to tap the Strategic Petroleum Reserve, although it’s unclear if those plans had much of a role in the change in the average gas price.
Meanwhile, AAA said Monday that by its formula, the average gas price in the United States has dropped to $3.39 a gallon. That’s a decline of just a cent from its average a week before.
“It’s too soon to tell if fears of a global economic slowdown caused by the Omicron variant will push oil prices lower for the long term,” AAA spokesperson Andrew Gross said. “But for now, the upward pricing pressure due to tightened supply and high demand seems to have abated, and that will likely result in pump prices stabilizing.”
Stephen Silver, a technology writer for the National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.