It’s not at all clear if President Joe Biden’s latest announcement that he’s releasing oil from the nation’s emergency stockpile will help bring gas prices down. But the good news for drivers – and Biden – is that several factors are pointing to lower prices ahead at the pump.
The national average stood at $ 3.85 a gallon Wednesday, down 2 cents from Tuesday and 7 cents in the last week. Much of that decline was driven by a steep price drop in western states, where prices had shot up to near record levels earlier this month.
One of the biggest factors in the recent price surge has been US refineries shutting down either for regular maintenance or following accidents – such as an explosion at a refinery near Toledo, Ohio, last month. But a number of West Coast refineries that had been offline have returned to operations, and that has sparked a plunge in gas prices west of the Rocky Mountains, driving down the national average.
In just the last week, the average price in California has fallen 30 cents a gallon, and there’s been a 25-cent drop in Oregon and a 20-cent dip in Washington and Nevada.
Although refineries dealing with accident repairs won’t be back online anytime soon, those that had been closed for scheduled maintenance are now near to resuming operations, according to experts. That will likely lead to lower prices elsewhere in the nation, even if the drop isn’t as precipitous as it has been out west.
“What’s been going on in the west is a little bit of a preview and may happen in other parts of the country,” said Tom Kloza, global head of energy analysis at OPIS, which tracks prices at 130,000 US gas stations for AAA.
Oil and gas futures fell in Tuesday trading after word got out that Biden would announce the release of 15 million barrels of oil from the nation’s Strategic Petroleum Reserve. But that represented just another phase of the planned release of 180 million barrels over six months that was announced in late March.
Oil analyst Andy Lipow said the markets initially moved due to confusion over whether or not more oil was coming out of the strategic reserve.
“The market has been quiet volatile,” Lipow said. “As it started selling off [Tuesday]it triggered some liquidation [of oil futures]. ” Oil and gas prices both rebounded modestly in Wednesday trading.
Drivers enjoyed a long, steady fall in gas prices that saw the national average fall for 98 straight days, from the record high of $ 5.02 a gallon in June until bottoming out at $ 3.68 a gallon a month ago. But with the price up nearly 18 cents a gallon – 5% – in the month since then, and with the midterm elections only weeks away, Biden was feeling pressure to take action.
“Politicians take credit when gas prices go down, and get the blame when they go up,” Lipow said, “even if they have little to do with the actual price movement.”
Whether or not Biden’s decision to release oil from the SPR had a significant impact, there are several other factors driving down future prices. One is the seasonal decline in demand at the end of the summer driving season, coupled with the regularly scheduled end of regulations requiring cleaner – and more expensive – blends of gas be sold during the summer to fight smog.
But an even bigger factor is the growing concern that the US and other global economies could soon fall into recession. Recessions are a sure-fire way to reduce demand for gas and oil, as fewer people have jobs to commute to and less money to spend on travel.
“When the world goes into recession and the demand for commodities goes down, the market is unforgiving,” Lipow said.
Correction: A previous version of this article misidentified the day of the week the national gas price average stood at $ 3.85 a gallon, and the prior day’s price.