If you’re driving this weekend, there’s some good news: Gas prices are much cheaper.
American drivers felt the squeeze last summer as gas prices skyrocketed to an average of nearly $5 per gallon. Now, as we head into the 2023 4th of July holiday, there’s good news for anyone driving to their destination. Gas prices are far lower on average than they were a year ago, and prices actually took a significant plunge just in the past few days.
According to AAA, nearly 43.2 million Americans are expected to travel by car this holiday weekend. That outnumbers people who are flying by about 10 to 1, and a figure that is 2.4% higher than the same time in 2022. As we head toward 4th of July, the national average for gas is $3.54 per gallon — a notable $1.33 per gallon (or 28%) drop.
The only larger 12-month drop occurred between June 30, 2008 and June 29, 2009, during the Great Recession. On average, each motorist will spend $20 less for each tank to fill up than they did this time last year.
While gas prices are indeed down in all 50 states, prices still trend higher than they do in the Western U.S. than they do in the Midwest or Southeast, according to AAA data. Nevertheless, California slipped back below $5 per gallon to $4.82 (down from $6.28 per gallon in June 2022).
Washington is currently the most expensive state for gas at time of writing, with average prices hovering around $4.98 per gallon.
Why are gas prices dropping?
While gasoline and diesel are still nowhere near as cheap as they were in 2020, in the early stages of the COVID-19 pandemic, the drop is encouraging for drivers looking for a break from inflated prices in pretty much every other sector (especially food).
After spiking in 2022, oil prices are dropping mainly over concern about the Federal Reserve raising interest rates to trigger an economic slowdown. The markets are weighing the likelihood of a recession against global oil supply, which is currently keeping prices low. However, analysts expect the oil market to tighten and prices to rise again next year.
Another wild card: Russia’s war in Ukraine. So far, Western sanctions and fallout from the war itself have not derailed Russian oil exports, at least not in a similar way that disruptions to Ukrainian grain exports have affected food prices. Patrick De Haan, head of petroleum analysis at GasBuddy, notes the situation is “still a bit of a powder keg. It could lead to more explosiveness in oil prices”, depending on how the situation in Ukraine moves forward in the coming months.
