The historic streak of falling gasoline prices is over.
After sinking every day for more than three months, US gasoline prices rose a penny, to $3.68 a gallon, on average on Wednesday, according to AAA.
That ends 98 straight days of falling pump prices, the second-longest streak on record since 2005.
The last time the national average price of gasoline rose was on June 14, when it hit a record high of $5.02. Prices have fallen every day since then and Thursday would have marked the 100th straight day of declines.
The drop in gasoline prices was driven by a number of factors, including stronger supply and weaker demand as drivers balked at high prices and unprecedented emergency oil releases by the White House.
Another major factor that had been driving gasoline prices lower: growing concerns about a global recession that could hit demand for gasoline. People who lose their jobs don’t have to drive to work, and even those who do have jobs cut back during recessions.
The strength of the dollar also helped lower the price of gasoline, because crude oil is priced in dollars. That means that each dollar can buy more oil than it would if the value of the currency were flat or falling. The dollar index, which compares the value of the dollar to major foreign currencies, is up 15% this year. That also means oil prices are rising faster for countries that don’t use the dollar, dampening global demand.
At the same time, Russia’s oil flows have held up better than feared despite sanctions and the war in Ukraine. The Russian 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, only slightly lower than today. Russia’s announcement on Wednesday that it would increase troop mobilization helped push crude oil futures up 2% on global markets.
Gas prices will likely remain relatively close to current levels in the near term, said Tom Kloza, global head of energy analysis at OPIS, which tracks gas prices nationwide for AAA.
“I don’t think you’ll see a major move up or down,” he said recently, ahead of Wednesday’s modest price rise. She 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 cut prices. Also pushing prices lower: Oil traders remain nervous about the state of the global economy.
“Crude doesn’t have any speculative investment money behind it right now,” he said.
Wholesale gasoline futures point to considerably lower gas prices by the end of the year, with the possibility that sub-$3-a-gallon gasoline will be commonplace in much of the country by then, Kloza said. But she warned that “futures prices are a notoriously poor indicator of what the future will bring.”
Although gas below $3 is still rare (only 5% of the 130,000 gas stations in the United States sell gas below that price, according to OPIS), relatively cheap gas has become much more common over the months. of decline. Nearly one station in four nationwide sells gasoline for less than $3.25 a gallon, and 56% sell gasoline for less than $3.50 a gallon.
Cheaper gasoline has been a big boost to the US economy, easing inflationary pressure and giving Americans extra money to spend. Given that the typical US household uses about 90 gallons of gasoline a month, the drop in fuel prices saves those households about $120 a month from what they had been paying since the spike in June.
A one-cent increase in gasoline prices isn’t a significant change for most drivers, and prices could fall again as global economic concerns mount along with fears that fuel demand will continue to fall.
However, if gasoline prices start to rise, that could undermine the efforts of the Biden administration and the Federal Reserve to keep inflation in check. Falling gasoline prices are the only reason U.S. consumer prices have been broadly flat for the past several months after rising sharply in 2021 and earlier this year.