Gas prices continued to drop last week amid lower demand and as the Biden administration's plan to tap petroleum reserves took effect, according to AAA.
The national average price of gas fell to $3.79 per gallon, nine cents less than the week before.
"Global recession fears coupled with the Biden Administration's plan to continue tapping the Strategic Petroleum Reserve into December has helped temper oil prices," Andrew Gross, a spokesperson for AAA, said. "This will help take the pressure off pump prices, benefiting drivers and their wallets."
Earlier this month, President Biden announced the release of an additional 15 million barrels of oil from the emergency reserve, saying it would lower gas prices and bolster domestic oil production. The decision is part of the administration's 180-million-barrel drawdown that was announced this past spring.
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Gas prices likely to keep falling
Gas prices have steadily declined over the past few weeks and have fallen by an average of $1.22 per gallon nationwide since their June peak, according to White House estimates.
Earlier this month, the U.S. Energy Information Administration (EIA) said it anticipates that demand for gas would increase as motorists drive more through 2023. Still, it forecasted that gas consumption in 2022 and 2023 will be slightly lower than the 2021 average, at just under 9 million barrels per day.
"If demand remains low and oil prices don't spike, pump prices will likely keep falling," AAA said.
However, the current price softening could be short-lived since the drop also relied on the release from the Strategic Petroleum Reserve, according to Jay Young, the founder and president of King Operating Corporation.
"Any reduction of gasoline at the pump for consumers is a good thing and adds to their food and other rising bills," Young said.
He added that while "the Strategic Oil Reserves will help," it "has a limited long-term impact on the market."
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Inflation hits utility indexes
The Consumer Price Index (CPI), a measure of inflation, rose 8.2% annually in September, according to the Bureau of Labor Statistics (BLS). Utilities had no relief in prices, with the index for natural gas rising 2.9% and the electricity index rising 0.4%.
And ahead of the cold winter months, the EIA forecasted that U.S. households will spend 28% more on natural gas, 27% more on heating oil, 10% more on electricity and 5% more on propane.
"To the extent that gas prices do decline and driving season wanes into the winter, we can expect consumers to shift their attention to household utility bills," Benjamin Dierker, director of public policy at Alliance for Innovation and Infrastructure, said. "The winter season is expected to be very cold and home heating will be expensive.
"Oil and gas do the lion's share of home heating, and while they are correlated to gasoline prices, there is no guarantee that heating oil and natural gas prices will see declines this winter," Dierker continued.
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