August 17, 2022

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Gasoline futures are dropping, which could mean more relief at the pump

2 min read

Brie Olootu pumps gas at an Exxon Mobil gas station on June 09, 2022 in Houston, Texas. Gas prices are breaching record highs as demand increases and supply fails to keep up.

Brandon Bell | Getty Images

Prices at the pump have retreated from June’s never-before-seen levels but remain stubbornly high.

Some relief could be in sight. U.S. gasoline futures have dropped more than 11% this week, following a decline in oil prices as recession fears spark concerns around a drop-off in demand.

The national average for a gallon of gas stood at $4.75 on Thursday, according to AAA. That’s down from the record $5.016 hit on June 14. But prices are still $1.62 higher than this time last year.

California has the highest state average, at $6.185. The state’s Mono county is currently averaging $7.224 per gallon. South Carolina’s average of $4.257 is the lowest in the U.S.

Patrick De Haan, head of petroleum analysis at GasBuddy, said the national average could drop to between $4 and $4.25 by mid-August, barring a price spike in oil.

West Texas Intermediate crude, the U.S. oil benchmark, slid below $100 per barrel on Tuesday for the first time since mid-May. Oil makes up more than half the cost of gasoline, with refining expenses and taxes, among other things, also influencing prices.

On Thursday WTI traded around $99.51 per barrel, while gasoline futures stood 1.2% higher at $3.27 per gallon.

Prices at the pump tend to rise faster than they fall, as stations look to lock in profits in an ultra-competitive business.

“When [oil] prices trend up, stations are usually 2-5 days behind price increases until the upward trend stops,” said De Haan. “That means for weeks they can be behind on raising prices. When prices do finally fall, they lower prices slowly to recapture margins from when prices rose. The longer and steeper upward trend, the slower stations likely lower prices when there’s finally relief.”

But there were some positive signs of easing. De Haan counted 2,535 gas stations with prices…

2022-07-07 11:00:28

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