New data from AAA released Thursday pegs the average price of gas across the country at $3.99 per gallon, the first time the mark has dipped below $4 since March 5.
While most of the country is comfortably below that $4 line, gas in Utah and much of the West remains significantly higher. The average price for a gallon of gas in the Beehive State was at $4.67 Thursday. Prices in California continue to lead the nation and now average $5.38 per gallon, according to AAA.
Industry experts say numerous factors contribute to differing gas prices from state to state, including variations in state gas tax rates and clean fuel surcharges. And, western states have less robust petroleum distribution networks than other regions that lead to higher costs for delivering fuel to consumers and, ultimately, higher prices at the pumps.
AAA spokesman Andrew Gross said the steady price decline since gas hit an all-time U.S. high of more than $5.02 per gallon on June 14 boils down to simple supply and demand economics.
“Oil is the primary ingredient in gasoline, so less expensive oil is helpful in taming pump prices,” Gross said in a statement. “Couple that with fewer drivers fueling up, and you have a recipe for gas prices to keep easing.”
Consumption tracking reveals drivers are hitting the road a lot less frequently as the summer travel season nears its traditional Labor Day closing weekend.
According to new data from the Energy Information Administration, gas demand dropped from 9.25 million barrels per day to 8.54 million barrels per day last week. The rate is 1.24 million barrels per day lower than last year, according to AAA, and is in line with the need at the end of July 2020, when COVID-19 restrictions were in place and fewer drivers hit the road.
A national survey conducted in late July by AAA found U.S. drivers have been making big changes to their driving habits in the face of costly fill-ups.
According to the report, almost two-thirds of U.S. adults have changed their driving habits or lifestyle since March, with 23% making “major changes.” Drivers’ top three changes to offset high gas prices are driving less, combining errands and reducing shopping or dining out. And, of those who reported making changes, 29% said they postponed vacations this year because of high fuel prices.
The recent decline in gas prices is also playing a role in driving down record high U.S. inflation.
The U.S. Labor Department’s Consumer Price Index report for July, released Wednesday, found prices on consumer goods and services rose an average 8.5% over the same time last year, down from June’s 9.1% annual clip and a rate tempered by a 7.7% decline in gas prices over the previous month.
While down from the historic highs reached earlier this summer, the cost of gas is still up 44% over a year ago, according to Labor Department data.
