As it becomes increasingly painful to fill up your gas tank, you might well be wondering: Will gas prices go down at some point?
Fuel prices feel like they’ve been on a never-ending ride higher of late. A year ago, the national average price of regular unleaded was $2.96 per gallon, according to travel website AAA. A month ago, it was $4.12. Today, it’s $4.33. And it’s probably heading higher still this spring.
We recently looked at the reasons why gas prices are so high: global oil demand rebounding from the pandemic faster than production. The war in Ukraine. Efforts in the U.S. to transition the economy away from reliance on fossil fuels. Energy companies’ reluctance to invest in more oil production.
Now, we’ll try to answer the question undoubtedly on many drivers’ minds: Will gas prices go down soon – and if so, what will do the pushing?
Fuel Tax Relief?
A few states have tried to ease the financial burden on their residents by suspending their state fuel taxes for a short period. But are gas prices doing down because of those moves?
For instance, Connecticut suspended its 25-cent-per gallon state levy on fuel for April, May and June. But according to AAA, the average price of regular unleaded in the Nutmeg State today is $4.32, up from $4.13 a week ago. Increases in crude oil prices can swamp the effect of suspending a state’s gas tax. And when those state taxes are paused, the savings don’t all go in the driver’s pocket. Fuel sellers keep some portion of them.
Could the federal government give drivers nationwide a tax cut by suspending the 18.3-cent-per-gallon federal tax on gas? Unlikely, report my colleagues at The Kiplinger Letter, who regularly speak with lawmakers on Capitol Hill to assess which bills have a chance of passing.
In the case of a proposed suspension of the federal gas tax, Democrats, the majority party, can’t agree among themselves to do it.
More Oil on the Way
Here’s a little good news: More crude oil should be reaching the global market later this year, which means more gasoline and other refined fuels. Eventually, that should help push gas prices down, or at least keep them from rising so fast.
In the U.S., energy companies are slowly putting more rigs to work drilling new wells, even as they prioritize returning cash to investors via share buybacks and dividends. Oilfield services company Baker Hughes reports on the number of working rigs in the U.S. each week, and most weeks lately, the tally has risen a bit. Meanwhile, OPEC announced last week that it …….