A Years ago, over Memorial Day weekend, people were thinking about gas prices.
Prices at the pump peaked at $4.72 a gallon on May 30 and then reached $5 a gallon in June. Diesel prices were as high as they’ve been in the US since the government started tracking them, raising the prices of everything from trucks or boats to airplanes.
This year, however, travelers are in for a respite; Gas prices are hovering around $3.57 per gallon, higher than both a month ago and a year ago. These low prices are linked to the price of crude oil, which is down about 35% from last year US Energy Information Administration.
Oil production hasn’t been affected as much as analysts worried it would be during last year’s invasion of Ukraine, says Patrick de Haan, principal petroleum analyst at GasBuddy, and Russia is still sending crude to market. At the same time, demand is weakening as recession worries curtail consumer spending and retailers have inventory orders overflowing with fewer goods.
Last year, by contrast, there was concern about supply constraints as consumer demand grew, with more trucks on the road and more diesel needed to fuel them, which pushed up prices.
“The big story from my chair is that demand is weak,” de Haan says. De Haan estimates that between lower diesel and gasoline prices on average, Americans spend about $667 million less on fuel per day than they did a year ago. The low prices should continue throughout the summer and into October, according to A Forecast from UBS,
But, perhaps, there is one silver lining to last year’s high gas prices: They inspired people to start buy electric vehicle, Google search interest in “electric cars” reached a record high Gas prices started climbing after the invasion of Ukraine in March 2022. EV purchases have been high since then—nearly 7% of new car sales 2023 first quarter EVThat’s up from just 2.4% over the same period in 2021, according to Cox Automotive. Overall in 2022, total new vehicle sales fell 8% over the previous year but EV sales up 65%, According to Cox.
Cox expects EV sales to continue their fast pace this year, despite lower gas prices, due to various incentives from the Inflation Reduction Act that will begin to be offered at dealerships. This, too, could impact gasoline prices, pushing them down even further as demand declines as more consumers bid goodbye to volatile gas prices, replacing their combustion engine cars with EVs.
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