That’s little consolation for California motorists, who paid an average of $6.38 a gallon on Tuesday, but it’s a sign that prices will be slightly lower ahead of the holiday season. July 4, experts say.
Consumer gasoline prices have fallen slightly in California in recent days, with the state average down nearly 6 cents from last week, the AAA survey of gas station prices showed.
Los Angeles County has seen its largest average daily price drop for a gallon of regular gasoline since April 13, with prices falling 1.5 cents to $6,403 on Tuesday.
As in LA, the Orange County average also fell for the seventh straight day, dropping 1.4 cents overnight to $6,334.
According to a report by the US Department of Energy Information, pump prices are falling in part due to reduced fuel consumption needs as more and more drivers change their daily habits and prioritize budgets for leisure travel. position, said Doug Shupe, director of corporate communications for the Southern California Auto Club. .
Marie Montgomery, a spokeswoman for the Southern California Auto Club, said wholesale oil prices fell about 40 cents nationally and 60 cents in California in the last week.
Montgomery said the drop was partly due to the Federal Reserve’s move to raise interest rates last week.
“There is a kind of negative reaction to commodities when interest rates are about to be raised,” Montgomery said. “So that’s really why we see gas prices falling.”
At some gas stations in California, prices have dropped below $6 a gallon, Montgomery said. They could fall further if high fuel costs continue to create “demand destruction,” as consumers choose to travel less rather than face high prices at the pump.
But don’t expect prices to drop quickly, nationally or in California.
Shupe said that despite a slight decrease in gasoline demand nationwide, gasoline consumption demand remains high as we enter the summer tourist season.
“It’s unlikely we’ll see any serious declines anytime soon,” Shupe said. “The reason is that we are still facing the two biggest pressures, which are price increases at the pump” – supply and demand.
The pressure on the supply side mainly comes from global oil concerns because of Russia’s war with Ukraine. Demand pressure comes from everything that every driver still has to do, both for work and for travel.
“We’re in that time of year when we have a lot of people taking leisure trips by car,” says Shupe.
Demand could increase – and prices could also rise – as the 4th of July holiday approaches, similar to the increase seen over Memorial Day weekend.
“We have seen the projected increase come to fruition for Memorial Day travel,” Montgomery said. “Local, our travel agents are very busy booking trips. People are really eager to get out there because there are more and more restrictions.”
One reason fuel prices are higher in California is the state’s environmental law, which requires refineries to follow specific gasoline formulations designed to reduce air pollution when temperatures are high.
With fewer suppliers producing the state’s unique gasoline blend, California’s market is less competitive and less likely to import fuel from other markets.
Then comes taxes. According to the Office of Legislative Analysis, a tax charged to gasoline suppliers prior to delivery to retail stations will be passed on to California drivers in the form of a higher price at the pump.
California drivers also have to pay federal excise tax on gasoline, which is similarly charged to suppliers and passed on to consumers, up to 18.4 cents a gallon, according to the report. US Energy Information Administration.
In addition to taxes, the American Petroleum Institute, a trade association for the US oil industry, estimates that the country’s gasoline demand has reached highs reminiscent of the 1960s.
The price of crude oil is the most important component of the cost of gasoline, accounting for 60% of the price per gallon, Estimated EIA.
Russia’s invasion of Ukraine has also had a major impact on global markets, as Russia is the second-largest contributor of crude and refined oil globally. Since the crisis, prices have skyrocketed, reaching a high of $122 per barrel and staying above $90 since Feb. 25.
https://www.latimes.com/business/story/2022-06-21/gas-prices-california-nationwide-fall California gas prices are falling. Will it last?