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Tuesday, September 27, 2022

Gasoline for $3 in the US? could be right around the corner

Nueva York (CNN Business) — Gasoline prices in the United States continue to fall and could continue to fall, raising the chance that gasoline will be below $3 a gallon before the end of the year in much of the country.

On Monday, the national average for a gallon of regular gasoline was $3.96, just a fraction of a cent less than on Sunday. However, this fall continued for 62 consecutive days of falling gasoline prices.

The national median price has fallen $1.06, or 21%, since hitting a record high of $5.02 a gallon on June 14.

The average price is somewhat high in some high price states such as California where the average price is $5.37 per gallon. The national median price, at which half of the country’s gas stations sell gasoline for more and the other half for less, has fallen to $3.80 a gallon.

Nearly all states enjoy higher price exemptions. Even in states with high gas prices like California, the average price has dropped more than $1 a gallon since its peak in June.

In 28 states, the average price of a regular car is now $3.99 or less. Roughly two-thirds of the 130,000 gas stations nationwide sell for less than $4 a gallon. And many sell it for much less. About 25% of gas stations nationwide sell gasoline for less than $3.50 a gallon.

As students return to school and the summer driving season draws to a close, gas prices are likely to fall further, said Tom Kloza, global head of energy analysis at OPIS, which tracks American Automobile Association (AAA) prices. . He said it’s entirely possible that by September or October the national average for common foods will again fall below $3.53 a gallon, as it did when Russia invaded Ukraine in late February.

And he said Monday’s wholesale gasoline futures for November and December deliveries indicate that retail prices will fall below $3 in many states by the end of the year. But he said there was still a risk that unexpected hikes in gasoline prices could ruin that good news for drivers.

“We still don’t know what Putin is going to do and whether a hurricane will hit the Gulf Coast,” he said of factors that could cause a new increase in gasoline prices.

The main driver of the fall in gasoline prices is falling oil prices, which reached a six-month low in trading on Monday, as futures fell another 4% amid growing fears of a global recession. Since June 8, oil futures are down 24-28% depending on the benchmark oil used.

Recessions can significantly reduce demand for oil and gasoline as people lose their jobs and don’t have to commute or cut spending and travel less. In 2008, the average gasoline price fell 60% between a record $4.11 a gallon in July and the end of that year, when the collapse of the financial markets triggered the Great Recession and massive job cuts.

The drop on Monday was partly due to the fact that China’s central bank was forced to cut interest rates due to signs of a slowdown in the economy in that country.

“The market took this as a bearish signal about the outlook for oil demand,” said Richard Joswick, head of global oil supply research at S&P Global Commodity Insights.

There were also signs that a new nuclear weapons deal could be struck between the US and Iran that could clear the way for Iranian oil exports to return to the market. According to Kloza, this was the main factor behind the decline in oil prices on Monday. Other experts also view the news from Iran as a factor in lowering oil prices, even if Iranian oil does not begin to flow freely until 2023.

“If a deal is struck with Iran, the implications for the oil market and Russia could be far-reaching,” Lipow Oil Associates President Andy Lipow wrote in a note Monday.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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