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If you’re looking for some good news, look no farther than your gas station: Regular gasoline, which peaked at 5.02 a gallon in June, now costs an average $3.36 a gallon. If you have a 12-gallon fuel tank, that’s a savings of $19.92 every time you fill up. “It’s coming at a good time,” says AAA spokesman Andrew Gross. “Everyone is getting a little extra in their wallet.”
These are national averages, and you’ll see wide disparities in gas prices across the country. In Texas, for example, the average cost of a gallon of gas is just $2.78, the lowest in the nation. In 11 states — Alabama, Arkansas, Georgia, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee, Texas and Wisconsin — gas costs less than $3 a gallon.
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In Hawaii, a gallon of regular will set you back $5.18, according to AAA. California ($4.67 a gallon) comes in second, with Nevada third at $4.40. Overall, the average cost of gas nationally is just a penny higher than it was a year ago. By the end of this week, Gross says, energy inflation could turn to energy deflation on a 12-month basis.
What’s driving prices down?
The biggest driver of gasoline prices is the price of oil. According to the Energy Information Administration, the price of crude oil accounts for 53.6 percent of the cost of a gallon of regular gas. Federal and state taxes burn up 16.4 percent of the cost of gasoline, while distribution and marketing smoke another 15.6 percent. The remaining 14.4 percent goes to refining costs and profits.
The price of a barrel of West Texas intermediate crude oil peaked in March 2022 at $123.60 a barrel; as of Dec. 6, it’s about $77 a barrel. One reason is winter: The days are getting shorter, and people tend to drive less in the dark, Gross says.
Another factor is China, the second-largest consumer of oil after the U.S. The Chinese economy has been sputtering recently, in part because of its zero COVID policy, which closes schools, businesses and shops down if even a few COVID cases are found nearby.