Fuel Prices Are Allegedly Cooling Off

Matt Posky
by Matt Posky
fuel prices are allegedly cooling off

With the last several months delivering record-breaking fuel prices, as society endures what has undoubtedly been the largest spike in energy cost and inflation since the 1970s, everyone has been hoping to catch a break this summer. Some have even gotten theirs. While things are still looking exceptionally bleak in the long term, the United States appears to be enjoying a modest reprieve.

The Biden administration has mobilized Amos Hochstein, the special presidential envoy and coordinator for international energy affairs, to tell the corporate press that the government is now forecasting per-gallon pricing below $4.00. Considering how unpopular rising energy costs have made the White House, having an expert out there suggesting things are about to improve seems a rather standard play to make. But there’s real reason to believe him. The U.S. Energy Information Administration (EIA) has shown gasoline prices trending downward since late June and has been echoed by GasBuddy — which claimed national fuel prices have declined for five consecutive weeks.

“We’ve seen the national average price of gasoline decline for a fifth straight week, with the pace of recent declines accelerating to some of the most significant we’ve seen in years. This trend is likely to reach a sixth straight week, with prices likely to fall again this week. Barring major hurricanes, outages or unexpected disruptions, I forecast the national average to fall to $3.99/gal by mid-August,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “So far, we’ve seen the national average drop for 34 straight days, with over 25,000 stations now back at $3.99 per gallon or less, and thousands more stations will join this week. In addition, we will see several states fall back under an average of $4.00, the majority being in the south, but that could spread to more states in the weeks ahead.”

That regional data is important because you might not even have noticed a decrease in your area. Anyone venturing more than 50 miles from home knows that pricing can vary immensely. This is due to a myriad of reasons including regional competition, local taxes, unique fuel blends, general demand, and how much work it takes to resupply that particular station. Having just spent some time in the boonies, I noticed a stark increase in prices at isolated truck stops vs the Flying J along the main highway. But the best I can say about my local station is that the price seems to have stabilized at the record-breaking highs we witnessed a few weeks earlier.

So are fuel prices really going down or are we just enjoying a respite from further increases? Well, according to AAA, the national average for fuel peaked on June 14th at $5.02 per gallon and has settled back down to a less-harrowing $4.52. Though that’s still a dollar more than the $3.16 per-gallon average enjoyed in July 2021 and over twice the $2.17 average witnessed in the summer of 2020.

“It’s not $5.00 anymore,” Hochstein told CBS on Monday. “It’s now $4.55. And I expect it to come down more towards $4.00. And we already have many gas stations around the country that are below $4.00. So we’re — we’re — this is the fastest decline rate that we’ve seen against a major increase of oil prices during a war in Europe where one of the parties in the war is the third largest producer in the world. So, these are extraordinary circumstances. We’ve taken very tough measures to address them right away. Both for the American consumer but really for the global economy too.”

He suggested Joe Biden’s trip to the Middle East set the stage for future oil negotiations, noting that the price per barrel had dropped and that Organization of the Petroleum Exporting Countries (OPEC) was plotting policy changes ahead of its big August meeting. While this is still assumed to result in an uptick in production, the timeline doesn’t necessarily mesh with Biden’s trip. Hochstein also praised the Biden administration’s decision to tap into the Strategic Petroleum Reserve (by 1 million barrels of oil per day) to aid the market.

The reserve was originally envisioned to keep the United States sanguine in times of extreme distress. While this certainly seems like a semi-plausible use case, Biden has still taken criticism for tapping in. Complaints usually include claims that this has done little more than aid highly profitable energy companies and some intense fury over reports of the president’s decision to sell 950,000 barrels to a state-owned Chinese firm in which Hunter Biden’s private equity firm held a $1.7 billion stake. An additional 4 million barrels are said to have been shipped to other nations, further enraging an opposition that already blames existing government policy for exacerbating the energy crisis.

While things are always a little more complicated than we’d like, gripes that the Biden administration’s policies aren’t helping the average consumer feel pretty valid. Comparisons have likewise been made to rising energy costs witnessed during the beginning of the Obama administration. Team Biden has unquestionably used Obama-era energy regulation as a blueprint for policy and has similarly filled its ranks with officials from the prior administration’s Rolodex.

Hochstein has served on numerous Congressional committees and was previously a lobbyist for domestic and international oil companies. However, he’s probably best known today for being an energy diplomat for the Obama administration and working in Ukraine.

My take is that plenty of developed nations have unsound energy policies ( e.g. Germany) and that deciding where those ideas came from is slightly less important than fixing them. As things currently stand, the only group that’s actually suffering from these unprecedented fuel prices are regular people. Oil companies are enjoying record profits and the crisis has allowed government officials to make the kind of decisions that will ensure they’ll have cushy jobs waiting for them at the largest corporate entities on the planet.

As for fuel prices, a barrel of oil has gotten roughly $20 cheaper within the last month. That’s a good sign that things might be turning around. But we usually see the summer surge break eventually and that day may have come sooner than expected as plenty of people decided it was better to save money by driving less. Having lost their buying power over the last few years, far fewer Americans can afford to take vacations anymore. Lofty fuel bills may have simply exacerbated the trend, driving down demand. Though there’s nothing to suggest this will remain the case on a longer timeline. For most of the world, energy regulations are still poised to become even more stringent in the years ahead and that’s almost assured to result in prices climbing again.

[Image: Nithid Memanee/Shutterstock]

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3 of 23 comments
  • Jkross22 Jkross22 on Jul 19, 2022

    West coast: Gas prices dropped from about $7 to $6.20 for premium. 2019 prices were in the mid $4's.

  • EBFlex EBFlex on Jul 20, 2022

    Interesting that the installed Xiden administration is now taking credit for the price drop after telling us over and over they couldn’t do anything about the price of gas.

    What disgusting, sub-human cowards

    • Golden2husky Golden2husky on Aug 18, 2022

      Biden is as repsonsible for the price drop as he is for the price hikes - as in not at all. Around here regular is now about $3.70 a gallon.

  • Sayahh Is it 1974 or 1794? The article is inconsistent.
  • Laura I just buy a Hyndai Elantra SEL, and My car started to have issues with the AC dont work the air sometimes is really hot and later cold and also I heard a noice in the engine so I went to the dealer for the first service and explain what was hapenning to the AC they told me that the car was getting hot because the vent is not working I didnt know that the car was getting hot because it doesnt show nothing no sign no beep nothing I was surprise and also I notice that it needed engine oil, I think that something is wrong with this car because is a model 23 and I just got it on April only 5 months use. is this normal ? Also my daughter bought the same model and she went for a trip and the car also got hot and it didnt show up in the system she called them and they said to take the car to the dealer for a check up I think that if the cars are new they shouldnt be having this problems.
  • JamesGarfield What charging network does the Polestar use?
  • JamesGarfield Re: Getting away from union plantsAbout a dozen years or so ago, Caterpillar built a huge new engine plant, just down the road here in Seguin TX. Story has it, Caterpillar came to Seguin City council in advance, and told them their plans. Then they asked for no advanced publicity from Seguin, until announcement day. This new plant was gonna be a non-union replacement for a couple of union plants in IL and SC, and Cat didn't want to stir up union problems until the plan was set. They told Seguin, If you about blab this in advance, we'll walk. Well, Seguin kept quiet as instructed, and the plan went through, with all the usual expected tax abatements given.Plant construction began, but the Caterpillar name was conspicuously absent from anywhere on the site. Instead, the plant was described as being a collective of various contractors and suppliers for Caterpillar. Which in fact, it was. Then comes the day, with the big new plant fully operationa!, that Caterpillar comes in and announces, Hey, Yeah it's our plant, and the Caterpillar name boldly goes up on the front. All you contractor folks, welcome aboard, you're now Caterpillar employees. Then, Cat turns and announces they are closing those two union plants immediately, and will be transporting all the heavy manufacturing equipment to Seguin. None of the union workers, just the equipment. And today, the Caterpillar plant sits out there, humming away happily, making engines for the industry and good paying jobs for us. I'd call that a winner.
  • Stuki Moi What Subaru taketh away in costs, dealers will no doubt add right back in adjustments.... Fat chance Subaru will offer a sufficient supply of them.