Gas Prices, a Big Inflation Factor, Are Coming Down Sharply

HOUSTON — Gasoline prices, on an upward tear for months, have reversed course in recent weeks, giving consumers a welcome break.

Gasoline was a major reason that U.S. consumer prices were 9.1% higher in June than a year earlier, the biggest annual increase in four decades. But now gas prices have fallen 28 days in a row, the longest decline since the collapse in energy demand in early 2020 as the COVID-19 pandemic paralyzed the economy. Energy analysts say American consumers are spending $140 million less on gasoline daily than they were a month ago.

The trend could easily reverse, especially if a hurricane knocks out a refinery on the Gulf Coast, since global oil supplies remain fairly tight. But for the moment, the nation’s inventories are slowly growing, in part because of continuing releases of oil by the government from its strategic oil reserves and reduced consumption.

The average national price per gallon of regular gasoline Wednesday was $4.63 a gallon, a drop of more than 2 cents from Tuesday, according to the AAA auto club. Prices have fallen 15 cents over the past week and 38 cents from four weeks ago, when the average price climbed to just more than $5 a gallon.

The fall in prices at the pump has followed a slump in global oil prices, which have been dropping over the past month amid growing signs that the world economy is slowing.

Fears that tightening Western sanctions on Russia would drastically reduce global oil inventories have proved overblown since Moscow succeeded in replacing European markets with sales to China, India and South America. In the meantime, expectations that the economy of China, the biggest importer of crude, would pick up have also been unfulfilled because of lockdowns in response to continuing surges of COVID-19.

Patrick De Haan, head of petroleum analysis at GasBuddy, a Boston company that tracks fuel prices, said the trend of lower gasoline prices could continue for a fifth week as long as oil prices — which have fallen below $100 a barrel — do not surge above $105.

“We’re not completely out of the woods yet,” De Haan said.

This article originally appeared in The New York Times .