After the Biden and Bezos war of words, gas prices really are coming back down to earth

July 7, 2022, 3:11 PM UTC
Joe Biden
President Joe Biden.
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After hovering near the $5 mark for a while, the average price of gas could fall to $4 per gallon by mid-August, analysts predict.

Gas prices have been retreating from their highs last month for a couple of weeks now. AAA reports the average price per gallon currently stands at $4.75 nationwide, a 16-cent drop from a month ago. Wednesday’s drop of 2.8 cents per gallon was the second largest single-day drop in the last decade.

The decline comes on the heels of a Twitter feud between Jeff Bezos and President Joe Biden. Four days ago, the Amazon founder slammed Biden for his tweet calling on gas companies to lower prices at the pump.

That spat, of course, wasn’t the catalyst for the dip in prices. Nor was Biden’s tweet, which read, “My message to the companies running gas stations and setting prices at the pump is simple: this is a time of war and global peril. Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.”

Bezos disparagingly called that demand “either straight ahead misdirection or a deep misunderstanding of basic market dynamics.”

The price drop (and expected continued fall) instead is a result of lower demand at the pump, as AAA found more Americans curtailing unnecessary trips due to the price of gas—and a dip in gas futures, which are down more than 10% this week, even with a spike on Thursday.

Patrick De Haan, an analyst with GasBuddy, said Wednesday he expects most stations will see drops of one to two cents per gallon every couple of days for the next two to three weeks, possibly longer. If “things do hold steady,” he says, “the national average could drop to $4-$4.25/gal by mid-August.”

As of Thursday morning, GasBuddy found over 2,500 stations that were already charging less than $4 per gallon, a figure which could grow exponentially in the coming days.

The wild card, of course, is oil prices. Those have been falling fairly steadily since reaching recent peaks on June 8. On Wednesday, the price of WTI Crude fell below $100 for a brief period, though it has jumped back above that level today.

A hurricane in the Gulf or a sharp rise in oil prices tied to the stock market’s volatility could endanger the ongoing decline of the price at the pump. And another surge in demand could endanger the price drop. (July, says AAA, is typically the heaviest month for demand.)

If those obstacles are avoided, though, things could be a bit more manageable this fall, though they’ll still be higher than last year’s low- to mid-$3 range. DeHaan says stations in several states, including South Carolina, Georgia and Texas, could see prices fall below $4. (Indeed, some stations in those states are already below that point. At least one location in South Carolina is currently charging $3.80 per gallon.) And California will likely fall back under $6 per gallon, with some stations in that state dropping below $5 per gallon.

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