Spread Thursday , 20 October 2022
4 minutes reading
[size=13][ltr]Credit: BRENDAN SMIALOWSKI / Contributor[/ltr][/size]
The national average gallon in America on Wednesday was $3.85, down 2 cents from Tuesday and 7 cents from last week. Most of that decline was driven by sharp price drops in western states, where prices jumped near record highs earlier this month.
One of the biggest factors for the recent price hike has been the shutdown of US refineries either for routine maintenance or in the wake of some accidents such as an explosion at a refinery near Toledo, Ohio, last month. But a number of idled West Coast refineries are back in operation, and that has driven down gasoline prices west of the Rocky Mountains, lowering the national average.
The average price in California was down 30 cents a gallon in the past week, there was a 25 cent decrease in Oregon and a 20 cent decrease in Washington and Nevada.
Although the refineries dealing with accident repairs will not be back in operation soon, according to experts, the refineries that were closed for scheduled maintenance are now close to resuming operations. This will likely cause prices to fall elsewhere in the country, even if the decline is not as rapid as in the West.
“What is going on in the West gives an overview and may happen in other parts of the country,” said Tom Kloza, head of worldwide energy analysis at OPIS, which tracks prices at 130,000 US AAA gas stations.
Drivers have enjoyed a long and steady decline in fuel prices, with the national average down for 98 days in a row, from a record high of $5.02 a gallon in June to $3.68 a month earlier. But with the price up about 18 cents per gallon -5%- per month since then, and with the midterm elections just weeks away, Biden was feeling the pressure to take action.
“Politicians take credit when fuel prices are low, and take blame when they are high, even if they have little to do with the actual price movement,” said oil analyst Andy Lebow.
Whether or not Biden's decision to release oil from the Strategic Petroleum Reserve has a significant impact, there are many other factors driving prices lower in the future. One is the seasonal decline in demand at the end of the summer season, along with the regularly scheduled end of regulations requiring the sale of cleaner - and more expensive - fuel blends during the summer to combat smog.
But the bigger factor is the growing concern that the United States and other global economies may soon enter a recession. Recessions are a surefire way to reduce demand for fuel and oil, as fewer people have jobs to move to and less money to spend on travel.
“When the world goes into a recession and the demand for goods drops, the market is unforgiving,” said Lipow.