Gas prices continued to fall last week amid falling demand and as the Biden administration’s plan to tap oil reserves took effect, according to AAA.
The national average gasoline price fell to $3.79 a gallon, nine cents lower than the previous week.
“Global recession fears coupled with the Biden administration’s plan to continue tapping the Strategic Petroleum Reserve through December have helped temper oil prices,” said AAA spokesman Andrew Gross. “This will help reduce pressure on prices at the pump, which will benefit drivers and their wallets.”
Earlier this month, President Biden announced the release of an additional 15 million barrels of oil from the emergency reserve, saying it would lower gas prices and bolster domestic oil production. The move is part of the 180 million barrel withdrawal announced by the administration last spring.
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Gas prices should continue to fall
According White House estimates.
Earlier this month, the US Energy Information Administration (EIA) said he expects gasoline demand to increase as motorists drive more through 2023. Still, he expects gasoline consumption in 2022 and 2023 to be slightly lower than the 2021 average, at a just under 9 million barrels per day.
“If demand remains weak and oil prices don’t rise, prices at the pump will likely continue to fall,” AAA said.
However, the current price slowdown may be short-lived since the decline was also predicated on the release of the strategic petroleum reserve, according to Jay Young, founder and chairman of King Operating Corporation.
“Any reduction in gas at the pump for consumers is a good thing and adds to their growing food and other bills,” Young said.
He added that while “strategic oil reserves will help,” they “have limited long-term impact on the market.”
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Inflation hits utility indices
The consumer price index (CPI), a measure of inflation, rose 8.2% annually in September, according to the Bureau of Labor Statistics (BLS). Utilities saw no price relief, with the natural gas index up 2.9% and the electricity index up 0.4%.
And ahead of the cold winter months, the EIA predicted that US households will spend 28% more on natural gas, 27% more on heating oil, 10% more on electricity and 5% more on propane.
“As gas prices drop and the driving season ends in winter, we can expect consumers to turn their attention to household utility bills,” Benjamin Dierker said. , Director of Public Policy at Alliance for Innovation and Infrastructure. “The winter season is expected to be very cold and home heating will be expensive.
“Oil and gas take the lion’s share of home heating, and although they are correlated to gasoline prices, there is no guarantee that fuel oil and natural gas prices will see a decline this winter,” he said. continued Dierker.
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