Petroleum industry experts are waxing optimistic on the current downward trend of retail gas prices across much of the U.S. now down to $4.52 per gallon on average according to AAA, but Utah drivers aren’t seeing nearly as much relief just yet, paying an average $5.07 per gallon as of Monday.
Western states continue to have the highest prices in the country with California leading the pack at $5.90 gallon.
While the national per-gallon average price has dropped nearly 50 cents since hitting an all-time high of $5.01 in mid-June, Utah is only down 19 cents from its own historic peak of $5.26 per gallon, set earlier this month.
While California’s clean-fuel regulations play a big role in its top-end prices, industry experts say western states gas prices trend higher as a rule thanks to infrastructure challenges and distance from refineries.
Is $4 per gallon in sight? For the moment, simple economics is behind the recent gas price slump with U.S. demand dropping from 9.41 million barrels a day to 8.06 million barrels per day in the last week, according to the U.S. Energy Information Administration.
“Global economic headwinds are pushing oil prices lower and less expensive oil leads to lower pump prices,” said Andrew Gross, AAA spokesperson, in a press statement last Friday. “And here at home, people are fueling up less, despite this being the height of the traditional summer driving season. These two key factors are behind the recent drop in pump prices.”
Gas price tracking site GasBuddy notes, as of last week, average prices across the U.S. had been trending down for over a month straight and the post-Independence Day drop in demand has been one of the largest ever.
“We’ve seen the national average price of gasoline decline for a fifth straight week, with the pace of recent declines accelerating to some of the most significant we’ve seen in years,” wrote Patrick De Haan, head of petroleum analysis at GasBuddy, in a Friday blog post. “This trend is likely to reach a sixth straight week, with prices likely to fall again this week.”
De Haan said he believes prices will descend below $4 per gallon on average across the country before kids head back to school.
“Barring major hurricanes, outages or unexpected disruptions, I forecast the national average to fall to $3.99/gal by mid-August,” De Haan, wrote in his blog posting. “So far, we’ve seen the national average drop for 34 straight days, with over 25,000 stations now back at $3.99 per gallon or less, and thousands more stations will join this week. In addition, we will see several states fall back under an average of $4, the majority being in the south, but that could spread to more states in the weeks ahead.”
But, global issues could change everything: While easing demand is helping bring prices down, industry watchers say more stringent global sanctions targeting Russia over its invasion of Ukraine, including a tightening of European Union restrictions on Russian oil that take effect on Dec. 5, could send prices back up to record highs, or beyond, later this year.
The Washington Post reports that J.P. Morgan has warned that in a worst-case scenario — in which Russia retaliates to additional sanctions by shutting down its supply altogether — the price of oil could jump to $380 per barrel, more than triple what it is today.
“If you were to ask me where could oil prices go, I would say pick a number,” Michael Tran, managing director for global energy strategy at RBC Capital, told the Post.
Tran said that while the outlook is murky, several indicators point to a price rebound. “This is the tightest oil market we have seen in a generation or more.”