After the national average for gas surpassed $5 per gallon in June, U.S. drivers are finally finding some relief at the pump. But how low could prices go?
A handful of Southern states are inching closer to $3 per gallon, and oil futures are predicting gas below that in some regions. But experts warn that the market faces factors that could again spike prices.
"There might be a little more relief coming at the pump," said Rachel Ziemba, adjunct senior fellow at the Washington, D.C.-based think tank Center for a New American Security, whose research area includes energy. "It's possible that some states could get into the lower 3s. I don't see that happening nationally outside of some sort of deep recession, which I wouldn't wish on us."
How much does gas cost?
As of Wednesday, the national average price for gas in the U.S. was $3.94 per gallon, according to AAA. That's down 21% from $5.02 for regular unleaded on June 14, the country's highest average price ever when not adjusting for inflation.
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Why are gas prices falling?
AAA data shows gas prices in the U.S. have been slipping daily since their mid-June peak, with most days knocking anywhere between 1 and 3 cents off the national average. As of Wednesday, AAA data showed the average price per gallon in 29 states was below $4.
"About 60% of what you pay at the pump is accounted for by the price of oil," said AAA spokesman Andrew Gross, who writes the organization's Monday gas report. "That is really the big factor."
West Texas Intermediate crude, the U.S. benchmark, has been trading below $90 per barrel this week after trading above $120 in June. The benchmark on Tuesday hit its lowest price since late January, before Russia invaded Ukraine.
Gross described the oil market's performance as "very headline driven.” Fears of a global recession – which would dampen oil demand – and signs of an economic slowdown in China instigated drops in oil prices. A potential nuclear deal between the United States and Iran that could put more oil on the market has also played a role.
"There still are declines in oil prices that haven't yet fully fed through into the gasoline price, so there might be a little more relief coming at the pump," Ziemba said.
Gross noted that prices at the pump remain elevated compared with 2020 or pre-pandemic times. AAA data shows that the price per gallon this time of year was $2.17 in 2020 and $2.63 in 2019.
Will states see gas prices below $3?
Wholesale gasoline futures indicate gas prices in "quite a few" areas could fall under $3 around Thanksgiving and Christmas, according to Tom Kloza, the global head of energy analysis for OPIS, the Oil Price Information Service. This includes regions in Oklahoma, Kansas and Gulf Coast states like Texas, among others.
But Kloza warned that 2022 is an especially difficult year to make predictions.
What could cause gas prices to rise?
The Atlantic hurricane season – which runs from June through November – could knock oil refineries offline and drive up prices. The National Oceanic and Atmospheric Administration this month said it still expects an "above normal" hurricane season.
"Hurricane season is the kind of a skunk at the party," Gross said.
What states have the cheapest gas?
The states with the lowest average regular gas prices as of Wednesday, per AAA:
What states have the most expensive gas?
The states with the highest average regular gas prices as of Wednesday, per AAA:
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This article originally appeared on USA TODAY: Here's why gas prices are dropping. Is $3 per gallon possible?