Gas prices, one of the most obvious signs of inflation, are now lower than they were a year ago.
Falling gas prices coincide with a decline in worldwide energy demand, driving prices lower. The national average for regular gasoline is hovering around $3.262, according to AAA.
After hitting an all-time high of just over $5.005 per gallon nationally in June, prices have steadily declined, easing inflation concerns. West Texas Intermediate crude oil, considered the benchmark that drives gas prices, hit its lowest level of the year on Thursday, at just above $71 per barrel.
One month ago, it was trading close to $89 per barrel. West Texas Intermediate Oil futures are now down 4% year-to-date.
The lower prices also reflect an improvement in the supply chain, with more oil flowing into the global market, with three times as many active rigs today than the low point we saw in 2020, according to The Washington Post.
Many analysts believe gas prices will continue to fall within the next few months. Patrick De Haan, a GasBuddy analyst, said he expects the national average to fall below the $3 a gallon threshold by Christmas, according to NBC News. De Haan said the timing of the reopening of the Chinese economy after the COVID-19 shutdowns could cause a spike in higher demand for oil.
Low gas prices are not unequivocally good news, however, as part of the reason for oil decline is due to a potentially worsening global economic outlook.
“If people were feeling good, if the stock market was going up, oil prices would probably be going up, too,” said De Haan.
De Haan said the price could drop as low as $2.75 per gallon nationally partially because winter-blend gasoline has fewer environmental restrictions, making it less costly to produce, The New York Times reported. Gas prices typically tend to rise in the spring when companies switch over to a more expensive summer blend and more drivers tend to hit the road, according to CBS KHOU 11.
Although prices continue to fall, consumers are still paying much more for gas than before the pandemic. In February 2020, the average cost for a gallon of gas was $2.44, according to the U.S. Energy Information Administration.