While the price of gas continues to fall from its record high set in mid-July, the rate of the price decline has slowed as of late. Today’s price of $3.66 is down just 4% over the past month ($3.82) and down only a half percent over the past week ($3.68).
Even with the price of gas falling almost every day since setting the record high of $4.12 on July 17, the national average price of gas is still up over 20% from what it was at the beginning of the year, and is up roughly 30% from what it was 12 months ago.
Currently, every state but Alaska ($4.51) and Hawaii ($4.42) have an average gas price below $4 per gallon. Delaware is reporting the lowest average price at $3.35 per gallon.
Barring any major disruption to oil and gasoline supplies – i.e. a destructive hurricane in the Gulf of Mexico, a major cut in oil production by OPEC, etc. – we should see prices continue their decline into the Thanksgiving time period.
While some of us feel that this price decline is some sort of conspiracy to sway our votes in the upcoming Presidential election, chances are, the price drop will have much more to do with the following two items:
- The summer driving season is over. In general, most people aren’t going to be doing as much driving. As you know from your Econ 101 class, if demand drops, price almost always follows.
- The switch to “winter blend” gas. In early spring, refineries begin producing what is known as “summer blend” gas, which has extra, more expensive additives to help reduce smog and keep air quality from getting too bad. In mid-fall, refineries drop the additives, so, in turn, the price comes down as well.
So, long story short, even though the rate of the decline in gas prices has slowed a bit lately, you should expect the decrease to continue for the next couple of months.