Gas prices set to tumble 10% ahead of the Fourth of July
How did gas prices peak in mid-April, and what was the highest price per gallon recorded?
Gas prices peaked in mid-April due to easing domestic demand and supply conditions. The highest price per gallon recorded during this peak was $3.67. The decrease in gas prices is expected to continue, potentially falling another 10% from the current $3.44 per gallon, providing relief to households amidst high inflation and economic uncertainty.
What factors have contributed to the predicted 10% drop in gas prices this summer?
The predicted 10% drop in gas prices this summer can be attributed to easing domestic demand and supply conditions. Gasoline demand has trailed behind 2023 levels for most of this year, with economic uncertainty possibly suppressing demand during the summer. Additionally, the U.S. produces about 13.2 million barrels of oil per day, and non-OPEC producers like the U.S., Canada, Norway, and Brazil have contributed to an increase in supply. These factors have collectively led to a decline in gasoline prices, which may continue to decrease in the coming weeks.
How might the decrease in gas prices affect U.S. household balance sheets during the summer spending season?
The decrease in gas prices is expected to bolster U.S. household balance sheets during the summer spending season. As gasoline spending accounts for around 3% of the average household budget, a 10% reduction in gas prices could lead to a 3% decrease in overall spending for some households. This could result in consumers having more disposable income, which may be redirected towards other goods and services, potentially boosting the economy. Additionally, lower gas prices may lead to reduced inflationary pressures, which could support the argument for interest rate cuts later this year, further easing financial burdens on households.