- Gas prices have fallen quickly over the past three weeks and now sit well below the mid-June record.
- Thousands of stations' prices could fall below $4 per gallon in the coming weeks, one analyst said.
- Summer traveling, hurricane risk, and delayed refinery maintenance still threaten to push prices higher.
Gas prices in the US are tumbling just as fast as they surged.
The average price for a gallon of regular-grade fuel slid to $4.77 in the week that ended July 4, according to the Energy Information Administration. The reading marked a third straight weekly decline and puts the nationwide average nearly 5% below the mid-June peak of $5.01 per gallon.
Daily price data is even more encouraging. The nationwide average dipped to $4.75 on Thursday, according to AAA, down from the record high of $5.02 recorded on June 14. Separately, fuel-price tracker GasBuddy recorded a nearly 3-cent decline in the average price per gallon on July 6, tying the second-largest one-day drop in the last decade.
Plunging wholesale gas prices could put even more downward pressure on costs at the pump. Refiners' profit margins, known within the industry as the "crack spread," are also turning over, meaning the cost of turning crude into gasoline isn't as high as it was a few weeks ago.
The multi-week decline could be the start of a much longer downtrend, Patrick De Haan, head of petroleum analysis at GasBuddy, tweeted Wednesday. Americans are already spending about $100 million less every day on gas compared to when prices peaked in mid-June.
Should crude oil prices continue to tumble, most stations will lower prices by 1 or 2 cents every couple of days, De Haan tweeted. More than 2,500 stations across the country are already selling gas for $3.99 or less, and that number is poised to climb, he added.
"In the days and weeks ahead we're going to see hundreds, nay, thousands of stations falling back under $4 per gallon," De Haan said in a separate tweet.
The return to cheap gas will be a bumpy and uneven ride
To be sure, relief will look very different from state to state. While Californians are still paying $6.22 for a gallon of gas on average, the same measure sits at $4.29 in South Carolina, according to AAA.
Georgia, Louisiana, Arkansas, and other southern or Sun Belt states will be the first to see averages fall below $4 per gallon, De Haan said. Average prices in California, meanwhile, aren't likely to dive below $5 for several months.
A steady decline isn't a given. Weakened demand pulled prices lower through the summer, but there are still several weeks left of peak travel season. The drop in gas prices could revive some Americans' travel plans and power demand sharply higher.
The future of the crude oil market is also fairly murky. Though crude has fallen considerably from its June peak, the decline has been choppy. West Texas Intermediate crude futures slid as much as 4.4% on Wednesday, yet Thursday's session saw prices rebound as much as 5.8%. Investors could view the decline as an opportunity to buy oil at discounted levels and spark a recovery rally that would push gas prices back to June's highs.
Some top economists on Wall Street are bracing for exactly that. Analysts at JPMorgan deemed energy its "highest conviction sector," arguing in a Thursday note that lower prices offer the strongest risk-return outlook. The downturn in energy commodity prices including crude "has proved painful for long-term buyers," but the bank sees current prices as "very attractive" for investors, the team said.
The looming hurricane season and delayed maintenance at refiners also threaten to drive prices higher, JPMorgan added.
Gas prices still have a long way to go before they reach the sub-$3 average enjoyed before the pandemic. But as prices continue to drop and several signs hint at broad inflation cooling, the US just might be past the peak of gas-pump pain.