For the last few weeks, millions of frustrated American drivers have been on the receiving end of much-needed relief at the pump.
A continual decline in the global price of oil has helped the national average for a gallon of gas fall for a second week, landing at $4.85 on Thursday. According to AAA, economic fears of a potential global recession have led to less demand for oil, cutting the price to roughly $107 per barrel, down from $110 the week prior.
“Fear is not a good reason to move a market like the one for oil, but it is a powerful motivator,” Andrew Gross, AAA spokesperson, said in a statement. “The cost of oil accounts for nearly $3 for every $4.89 at the gas pump. Consumers should find more relief when fueling up if oil prices drop further,” Gross continued.
According to Patrick De Haan, head of petroleum analysis at GasBuddy, consumers should expect more palatable prices at the pump this week. In fact, he is predicting that gas prices will drop ten to twenty cents by the Fourth of July weekend.
“While we may see brief relief here and there, the high prices don’t seem to be holding many Americans back from hitting the road with the economy fully reopen. While we may see relief as we approach July 4, and potentially after, the volatility in markets remains high,” De Haan said in a release.
De Haan added that “we still could see a super spike in gas prices later this summer, should a hurricane threaten Gulf Coast oil refineries or oil platforms. Motorists should know that while we may see small relief today, risks remain that prices could go up at a moment's notice and set new records again.”
Natasha Kaneva, JPMorgan’s head of global commodities strategy, recently predicted that the national average for regular unleaded will hit $6.20 per gallon by Labor Day. Similar predictions have been made by other industry experts as well, including Tom Kloza, global head of energy analysis for the OPIS.
Meanwhile, President Joe Biden has called on Congress to suspend federal gasoline and diesel taxes until the end of September in an effort to pass on cost savings to American consumers. Biden is also pushing states to take steps to remove their own taxes on gas and diesel.
GasBuddy noted that if the 18.3-cent-per-gallon tax is suspended, “prices at the pump could drop even further this summer, saving American drivers collectively about $70 million per day while the average motorist saves $25-$70 over three months.”
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.