US gasoline prices dipped below $4 a gallon for the first time since March, providing welcome relief to consumers after a historic global supply disruption sent fuel costs soaring for months.
National regular unleaded gasoline averaged $3.999 on Thursday, according to the American Automobile Association. The swing down in prices comes as the US and Iran signed an interim deal to end the war and reopen the Strait of Hormuz.
Pump prices have retreated from their May peak above $4.50 a gallon, helped by a decline in global crude prices. Oil has come under pressure, sliding below $80 a barrel, due to a combination of record US exports, a sharper-than-expected slowdown in Chinese demand, and a steady trickle of shipments through the strait.
Still, at $3.999 a gallon on average, prices are still well above where they stood before the war, and aren’t expected to return to those levels until next year, experts say.
With many Americans dependent on their cars for daily necessities, they had little choice but to absorb the higher fuel costs so far. The result was higher inflation and a squeeze on household budgets that spilled into the broader economy, as money spent at the pump left less available for discretionary purchases.
Politically, lower pump prices represent a win for the White House and US President Donald Trump, who has repeatedly emphasized that prices will fall after the war ends. With midterm elections approaching, Democrats have seized on the cost of gas while running against Trump’s Republican party.
The White House has also employed a wide range of policy levers to limit rising costs, including waiving the Jones Act and drawing down the Strategic Petroleum Reserve.
For now, traders are focused on the pace at which inventories are replenished to gauge whether further price declines are on the horizon. US gasoline stockpiles are at their lowest seasonal level in over a decade.
