Yahoo Finance Gas prices: National average hit by ‘mid-winter blahs’ on way to $3/gallon Read full article Grace O’Donnell and Ines Ferré January 22, 2024 at 6:58 p.m.· 3 min read
Gas prices in the US have stalled at just above $3 a gallon, according to AAA , after marching lower over several months.
As of Jan.22, the national average gas price stood at $3.07 per gallon, with 29 states seeing prices at the pump below $3.The price of gasoline has been on the decline since September, dropping by over $0.80 per gallon since September’s peak price of $3.88.
“I wouldn’t bet the farm on the national average reaching $3 a gallon, even if we are tantalizingly close,” AAA spokesperson Andrew Gross said in a recent statement.“The mid-winter blahs will likely keep pump prices waffling a few cents up and down for the immediate future.But keep an eye on frigid temps because those can affect refinery production, pushing some regional pump prices higher.”
The last time the national average gas price fell below $3 was in May 2021.
Gas prices briefly ticked higher in December to a $3.12 per gallon average amid higher holiday demand and elevated oil prices before resuming their downward move.
What determines the price of gas? More than half of the price consumers pay at the pump comes from crude oil, according to the Energy Information Administration (EIA) .Oil demand and the production targets set by the largest oil producers, including the Organization of Petroleum Exporting Countries (OPEC) and its allies (OPEC+), play an important role in gas price fluctuations.
Crude oil costs comprise over half of gas prices.
(Energy Information Administration) Gas prices have held steady even as oil prices rebounded and erased some of their losses earlier this month.
Crude oil futures for West Texas Intermediate ( CL=F ) ticked higher again on Jan.18, to around $74.08 per barrel, while Brent ( BZ=F ) futures also advanced.These moves came after the latest Energy Information Administration data showed a surprise jump in US crude stockpiles , potentially indicating softening demand.
Recent events, including Russia’s decision to adhere to oil export cuts, have put upward pressure on oil prices.Protests in Libya further restrained production after activists forced Libya’s National Oil Corporation to suspend operations at the El Sharara oilfield site, which produces up to 300,000 barrels of oil a day.
Story continues Meanwhile, the ongoing attacks against vessels in the Red Sea by the Houthis, an Iran-backed rebel group, have become another wild card for oil prices in 2024.
A customer pumps fuel into a vehicle at a gas station on Dec.
12, 2023, in Miami, Florida, as the national average gas price hovers above $3.(Joe Raedle/Getty Images) (Joe Raedle via Getty Images) Houthis have targeted over 23 commercial vessels in recent months, according to Freightos Terminal , a shipping data platform.
And fears of an escalating conflict in the Middle East have caused energy companies to delay and reroute oil shipments .
At the same time, crude oil prices aren’t the only factor driving gas prices.
Seasonality, refining capacity, and distribution also influence prices.
Gasoline inventories surged to the highest level in a year, according to the EIA , highlighting depressed demand.Winter is a seasonally slow season for gasoline, as snowstorms and cold weather impact driving habits.
State and federal gas taxes also contribute to the overall cost of filling up.In California, the state with the highest gas tax, taxes add up to $0.51 of the overall price per gallon, while those in Alaska pay just $0.09 per gallon.
Furthermore, gas prices act as a barometer for how consumers feel about the economy ; factor into elections ; and contribute to the larger inflation story that prompted the Federal Reserve’s latest interest rate hike campaign.
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