More than 15% less gasoline is being sold at the pump now than it was a year ago. This is because the summer driving season is over and oil prices in the U.S. have dropped to their lowest level in over a year, which suggests that fuel prices will continue to drop.
But the big U.S. election coming up and the height of storm season in the Atlantic Ocean could cause the fuel market to change quickly.
The top oil analyst at the Oil Price Information Service (OPIS), a Dow Jones company, said, “There are three things that move the needle in this country: politics, religion, and gas prices.” “Everyone remembers how much gas cost.” They also believe that God gave them the right to cheap energy.
GasBuddy says that it cost an average of $3.215 for a gallon of regular fuel in the U.S. on Monday afternoon. That is 23.1 cents less per gallon than a month ago and 59.4 cents less than a year ago.
Matt Smith, head U.S. expert at Kpler, said that the drop in oil prices last week “greased the wheels” for median gas prices across the country to drop to $3 a gallon.
The standard for the U.S. market, front-month West Texas Intermediate crude futures CL.1 1.45% CLV24 1.45%, closed at $67.67 on Friday, the lowest level since June 2023. Last week, the last price of reformulated gas futures RBV24 1.67% RB00 1.67% was $1.896 a gallon, which was the lowest price since February 2021.
“This is great news for Democrats: gas prices are going down right before the election.” Given the negative correlation between gas prices and a president’s popularity, they could not have planned it better, Smith said.
Gas price changes and oil prices
Gas costs usually go down this time of year, according to analysts. This is because fewer people are buying gas, the switch from more expensive summer grade gasoline to cheaper winter grade gasoline happens every year, and oil prices go down. These are all things that the president can’t change.
It’s all about the season, said Patrick De Haan, who is in charge of oil research at GasBuddy. They still do their holiday dance even when there is an election year.
As Americans see the weather cool down and “overall less getting outside and going places,” demand slowly goes down in the fall.
De Haan said that most of the country will soon move to cheaper winter gasoline. However, California won’t make that change until October. “Prices almost always fall in the fall and rise in the spring.”
As temperatures drop and the need for gasoline drops, gas stations can start selling winter-blend fuel on September 15. Jeff Lenard, a spokesman for the National Association of Convenience Stores (NACS), a trade group that represents the convenience store and gas station business, wrote in a blog post in February about how gas prices change with the seasons. He also said that weather events, like storms, can have an effect on gas prices in the late summer and fall. The switch over can cause prices to go up temporarily.
Lenard said that by the end of September, gas prices usually go down because of the switchover and less demand.
De Haan said that the drop in oil prices has also caused gas prices to drop. “Gas prices should have a lot more room to fall in the coming weeks, as long as oil doesn’t change its mind and things like hurricane season don’t happen.”
Tropical Storm Francine formed on Monday and is expected to get stronger this week, turning it into a hurricane. This could change the story for oil and gasoline if it causes major problems with production and port activity in the Gulf of Mexico.
Monday, WTI oil prices went up because there was a higher chance that big problems would happen with energy activities in the Gulf.
Smith from Kpler said that Francine is “set to be most bullish for crude prices” because it is moving east and will hit land in Louisiana. “It’s likely stopping some oil production in the Gulf of Mexico, which is what’s making the market rise.”
He said that oil products should be “less affected since more coastal refineries are in Texas. Gas prices would have been much higher when it hit land,”
Smith said that gasoline prices should keep going down until they reach $3 a gallon on average because they are still “playing catch-up to the recent sell-off in oil.”
Pull of the president
To the question of how much power a U.S. president has over the price of gas, De Haan replied, “very little.”
“The U.S. oil is not owned by the government, so even if the president makes the rules better, economics can still make oil companies not want to produce,” he said. Trump’s promise to bring gas prices down to $2 “rings hollow” because he still can’t force companies to make more oil, even if he loosens regulations. They would have to “shoot themselves in the foot” if they did that.
De Haan said that a president “can only have very limited impact on global dynamics that dictate prices” because the oil business is a global one.
Analysts still think that the low price of gas is good for Democrats.
Gas prices are over 55 cents less now than they were a year ago. Cinquegrana from OPIS said, “People will remember that when they go to the polls.” It’s a good sign, but I’m not sure if it’s enough to win the race.
Every politician wants to say that they keep gas costs in check or even lower them, and every candidate running against an incumbent wants to blame the person in charge, Lenard wrote on his blog about whether presidents control gas prices.
He said that after Russia invaded Ukraine in 2022, President Joe Biden “pulled out every tool at his disposal” to help lower gas prices. He did this by announcing the earliest-ever removal of oil from the nation’s Strategic Petroleum Reserve. But gas prices. kept going up and topped $5 across the country in mid-June.
“The Biden administration said that its quick actions helped lower gas prices by 40 cents over what they would have been,” Lenard said. “But that’s just speculation, just like the administration’s claims that gas stations, which only make 10 to 20 cents per gallon on average, can somehow drop their prices by a lot.”
Stats from the Energy Information Administration show that since 2000, every president has left office with gas prices higher than when they took office, he said. In his blog, he gave more information:
- Bill Clinton left office with gas prices 39 cents higher ($1.06 on Jan. 25, 1993; $1.47 on Jan. 22, 2001).
- George W. Bush also left office with gas prices 39 cents higher ($1.47 on Jan. 22, 2001; $1.84 on Jan. 26, 2009).
- Barack Obama left office with gas prices 49 cents higher ($1.84 on Jan. 26, 2009; $2.33 on Jan. 23, 2017)
- Donald Trump was a relative success story, with prices climbing a mere 6 cents during his time in office ($2.33 on Jan. 23, 2017; $2.39 on Jan. 25, 2021).
Lenard said that during Trump’s time in office, there were “extenuating supply and demand circumstances,” such as a “massive” drop in fuel use because of the COVID-19 pandemic.
He also said that gas prices that are very low “aren’t a bragging point.” Usually, what they mean is “the economy has gone downhill really badly because very low gas prices are usually linked to a sudden and severe drop in demand that only happens when the economy crashes.”
