Drivers are finally seeing relief at the pump, with the average cost for a gallon of unleaded gas under $4 a gallon, a dramatic drop from the record $5.01 average just a few months ago.
According to AAA, the current national average is $3.87 a gallon as a result of stable global oil prices and modest demand for gasoline in the U.S.
Although not as low as the national average from a year ago, the declining costs are much welcome.
But drivers may not want to get used to the current prices, as analysts warn they could climb back up. That may happen if a big storm shuts down oil production in the Gulf of Mexico or floods refineries along the Gulf Coast.
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It's hurricane season, so that remains a higher possibility compared to other times of the year.
Besides the storm threat, Tom Kloza, an analyst for the Oil Price Information Service, says refineries — which have been running nearly full-steam — will have to take a breather because they have delayed maintenance work and “that can’t be delayed indefinitely.”
Oil prices had been rising since April 2020, as economies around the world recovered from the shock of the pandemic, and reopened — slowly at first, then more rapidly. Demand for energy outstripped supply, pushing prices higher through all of 2021 and early this year. Then, in late February, Russia’s invasion of Ukraine caused oil prices to spike, and they remained high into June — although not as high as in July 2008 if inflation is considered.
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Even with prices coming down, OPEC earlier this month lowered its forecast of global oil demand for the rest of this year and next year. The cartel based those expectations on a belief that economic growth in the U.S., China and other key countries will be slower than it previously forecast.
