Gas prices fall below $4.50 a gallon, a two-month low

The national average for a gallon of gas has fallen below $4.50 for the first time in two months, offering a glimmer of relief for Americans weighed down by runaway inflation.

The national average stood at $4.495 on Tuesday, according to AAA, which represents a 10% pullback from its June peak above $5.

A gallon of diesel, meanwhile, has dropped to $5.51, down 31 cents in the past month.

In Spokane, the average price of a regular gallon of gasoline was $4.99 and $6.01 for diesel, according to AAA.

In Coeur d’Alene, the average price of a regular gallon of gasoline was $4.84 and $5.85 for diesel.

In some parts of the country, prices are even lower. There are now at least 35 states where at least one station is selling gas for less than $4 per gallon, according to the fuel-tracking app GasBuddy.

The lowest price can be found in Virginia, where at least two gas stations are selling a gallon of regular for $3.25.

A recent survey from the Oil Price Information Service finds that nearly 1 in 5 U.S. gas stations, or roughly 24,000, are charging less than $4 per gallon, CNN reported.

The drop marks a sharp turn from the relentless run-up in prices rooted in the Russian invasion of Ukraine.

The war disrupted energy markets, sending crude oil prices soaring and causing significant pain at the pump – a leading contributor to decades-high inflation, which jumped 9.1% in June, year over year, according to the consumer price index.

Soaring diesel fuel prices have similarly hammered U.S. supply chains, eating into corporate profits.

But fuel prices are easing as consumers buy less and energy markets brace for a possible recession. Demand for gasoline, measured as a four-week moving average, was 8.72 million barrels per day as of July 8, about 5.5% lower than it was a year ago, according to the Energy Information Administration.

The Biden administration has pursued various initiatives to ease pump prices – asking Congress for a pause of the gas tax, working with Group of Seven nations to place a global price cap on Russian oil, meeting with Saudi leaders and releasing an additional million barrels per day from the nation’s strategic reserves.

But economists note that those costs are mostly tethered to supply and demand, forces that are beyond policymakers’ control.

“There is not much any administration can do to bring prices down, because the main driver of this is oil and it’s a global commodity,” AAA spokesman Andrew Gross said. “You can’t order someone to pump more oil … It just doesn’t work that way.”

Energy markets have been anticipating a possible recession in the United States, Europe or both, which would sharply reduce demand for oil.

The continuation of coronavirus lockdowns in China, the world’s second-largest oil consumer, only adds to the uncertainty.

West Texas Intermediate crude, the U.S. benchmark, briefly fell below $96 per barrel last week; by comparison, it briefly crossed $130 in the early weeks of the Russian war.

On Tuesday, it stood close to $100 per barrel, suggesting fuel prices have stayed low for long enough to significantly pull down gas prices.

Falling gas prices are most profound in Texas, Louisiana, Oklahoma and the Southeast, which benefit from their proximity to Gulf Coast refineries.

Statewide averages stood within a cent of $4 per gallon in South Carolina and Texas, according to AAA.

The national average, too, is on track to reach $4 per gallon, according to GasBuddy’s head of petroleum analysis, Patrick De Haan.

Still, fuel prices are still sharply elevated from last year, when the national average was $3.17.

Analysts contend that the basic factor behind rising gas prices over the past year shows little sign of abating.

“As it stands, there is no sign from either Moscow or Kyiv that they are open to a negotiated settlement,” Pavel Molchanov, director and equity research analyst at Raymond James, said in an email.

“This means, sadly, that fighting is set to continue for many more months – and, as a result, sanctions (on the part of governments) and divestments (on the part of energy companies) will continue to escalate.”