Two years ago, gasoline prices in the United States hit a record high of $5.02 per gallon, causing significant economic repercussions. The spike in gas prices led to a decline in consumer confidence, unsettled investors, and strained family budgets. This surge contributed to a national inflation rate of 9%, the highest since the early 1980s.
However, current gas prices, while not considered cheap, have significantly decreased from that peak. As of Thursday, the national average for regular gas was $3.46 per gallon, down $1.56 from the record set in June 2022 and 13 cents lower than the same period last year.
During the Covid-19 pandemic, gas prices were lower due to reduced demand. In June 2021, the national average was around $3.08 per gallon. Gas prices peaked this spring at $3.68 per gallon on April 19 but have since steadily declined, providing relief to consumers and contributing to a decrease in inflation.
The Bureau of Labor Statistics reported that consumer prices remained unchanged between April and May for the first time in nearly two years, partly due to the decrease in gas prices. This easing of inflation has raised hopes that the Federal Reserve may reduce interest rates, offering relief to borrowers.
Gas prices also hold political significance, influencing public perception of the economy. Lower gas prices could positively impact consumer confidence and potentially affect political outcomes. Some states have seen significant decreases in gas prices compared to a year ago, with Utah, Washington, and Idaho experiencing notable declines.
While many may reminisce about $2 gas prices from the past decade, it's important to consider inflation-adjusted rates. Real gas prices in June 2019 and 2018 were comparable to the current national average of $3.46. The White House has emphasized investments in clean energy while acknowledging the role of domestic oil and gas production in meeting energy needs.
Despite ongoing tensions in regions like Ukraine and the Middle East affecting oil prices, gas prices have been influenced by improved gasoline stockpiles. The United States continues to experience record oil production, driven by the shale oil boom, with daily crude oil output nearing all-time highs.
