Post Russia’s descent into Ukraine, our fuel prices, which had originally spiraled, are now witnessing a remarkable dip, plummeting to February level lows. As of Tuesday, we’re averaging a neat $3.16 across the nation, a striking 11% slash when placed against last year’s comparison. Now, with most states seeing gas numerals at or even beneath that $3 per gallon mark, we’re witnessing a welcome return to a national average that echoes the numbers prior to the inflation surge.
This downward trendsetter in gas prices is reflected at the pump, with the national average for regular gas hitting $3.16 on Tuesday, marking an 11% slash from last year’s rates, as per the findings of the motor club AAA. In about 19 states, including game-changing states such as Georgia, North Carolina, and Wisconsin, gas price averages are already falling below that $3 per gallon mark.
This timely descent in price points transforms the act of filling up gas from a pocket burner to a yawn-inducing event right before another ‘great’ presidential election. As vital as essentials like eggs and milk, the fluctuation in gas prices serves as a pennant for the burgeoning health of our economy and the financial wellbeing of the great American citizens.
Gas prices, with their unique flair of being quite publicly displayed across town, have grown into an active reminder for those wondering if driving to work or the grocery store has become a steeper affair. Now, the average American expends a mere 2% of their disposable income on gasoline, a dip unseen in the celebrations leading to all the presidential elections in recent years, save for the 2020 face-off.
Considering the economic fallout of the global lockdown during the Covid-19 pandemic, this cut in fuel expenses is unsurprisingly being taken with a batch of skepticism. Drought in oil demand saw gas cost gyrate below the two-dollar mark in June 2020, right before the onset of the pandemic. Fast forward two years and the invasion of Ukraine by Russia escalates petrol prices to a $5 high per gallon.
The high energy prices have played a significant role in fast-tracking inflation for consumers worldwide. And although the president holds some sway over fuel costs, it’s the market dynamics that always dictate. As days grow shorter and temperatures cool with the fall season, we often witness a downward drift in prices due to reduced time spent outdoors.
On the back of reduced global demand and increased oil production in the US and other countries, oil prices have also seen a drop of over 15% in the past year. On Tuesday morning, it was approximately $72 a barrel. China, one of the major consumers of fossil fuels, has recently shown a weakening demand, playing into this trend.
OPEC and its partners have been negotiating to keep prices steady by controlling their output – to mixed results. The cartel has hinted at more relaxed measures come December. However, escalating conflicts in the Middle East that threaten oil production or shipping routes can still trigger a rise in oil prices.
For the moment, one of the leading contributors to U.S. inflation seems to be doing its part to soothe the economy. The price of diesel, surprisingly, has taken an even steeper drop compared to gasoline, tumbling to $3.59 on Tuesday from nearly $4.50 the previous year.
These favorable fuel prices are having a positive impact on public disposition according to Jared Scheeler, CEO of The Hub Convenience Stores. This has been seen as evidence of the power of smart and practical fiscal policies.
Interestingly, gasoline consumption in the United States has shrunk. Thanks to fuel-efficient vehicles and an increase in hybrid and electric cars, domestic consumption is now approximately four percent lower than 2019 figures as revealed by the U.S. Energy Information Administration. Energy analysts remained in doubt if it will ever rise to pre-pandemic figures again.
However, gas stations seem to have found their silver lining amidst reduced patronage; they’re charging more per gallon. In the United States, the average profit margins for gas have bulged from 24 cents in 2019 to around 39 cents, outpacing inflation, according to the Oil Price Information Service.
On a happier note, bigger convenience store chains are celebrating particularly robust pricing control. Alimentation Couche-Tard, the Canadian parent company operating Circle K gas stations, reported a gross margin of 48 cents per gallon of gasoline sold in the United States in the three months concluding in late July. This figure contrasts nicely to the 27 cents per gallon recorded in the same period in 2019.
This notable growth in margins was reflected in the company’s latest financial disclosures. The quarterly profit of the company soared almost 50 percent over that period, further illustrating the strength of the economic strategies being deployed.
In conclusion, while we might criticize some economic policies, it is clear that the current fuel price decreases and overall economic strategies are building a platform for more sustainable economic growth. Overall, these dynamics have painted a bright picture of economy, one where perhaps, the driver can finally enjoy his late-night drive without being haunted by the ghosts of prices past.
Let’s hope those behind the wheel of our economy continue to steer us in the right direction, navigating the bumps in the road with diligent and steadfast resolve. The hope is when our American citizens pull up at that gas pump, they’ll see numbers that don’t make their hearts sink, but make them proud of where their dollar’s going.