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Gas Prices Dip Below $4 a Gallon, but Relief May Be Short-Lived
The national average for regular gasoline fell below $4 for the first time in months, driven by seasonal shifts and falling crude oil pricesânot the election, analysts say. But experts warn the reprieve could reverse if the U.S.-Iran conflict escalates.
The average price of a gallon of regular gasoline dropped below $4 this week for the first time in months, offering drivers a measure of relief at the pump. According to AAA, the national average stood at $3.94 on Wednesday, down about 40 cents over the past month, with much of that decline occurring in the last two weeks.
The price crossed the $4 threshold on Tuesday. While some may speculate that the midterm elections played a role, industry analysts say the reasons are more mundane.
"Many will assume the election had something to do with it, but that's a myth," Patrick De Haan, head of petroleum analysis at GasBuddy, wrote in his industry newsletter. "For now, it's the seasonal shift, not politics, driving the relief at the pump."
Gas prices typically ease in the fall for several reasons. Summer is the peak driving season, and demand falls as colder weather sets in. Refineries also complete their annual maintenance by late fall, adding more supply to the market. And the blend of gasoline sold changes: winter-grade fuel, which uses more butane, is cheaper to produce than the summer blend designed to reduce smog.
Normally the switch to winter blend happens around September 15, but this year the Environmental Protection Agency and the Department of Energy moved it up to September 1, citing elevated gasoline prices driven by the war in Iran.
Still, the biggest factor behind the recent decline is the falling price of Brent crude oil, now around $90 a barrel, according to Jorge León, head of geopolitics at the research group Rystad Energy. That drop stems from more oil flowing out of the Middle East via pipelines and from market optimism over intensifying diplomatic efforts between the U.S. and Iran.
But León cautioned that the progress could easily be reversed. "President Trump may see further military action as a way to regain negotiating leverage before Democrats take control of Congress in January," he wrote in an email. "If we see renewed escalation, much of last week's oil price decline could quickly reverse." The same would be true for gas prices.
Congressional Democrats have expressed support for ending the war in Iran. While they have limited power to do so, they control the power of the purse and could withhold additional war funding or hold back confirmations of key officials.
Even if crude prices continue to fall, analysts say a full return to pre-war gasoline prices is unlikely anytime soon. Jaime Brito, executive director of refining and oil markets for Dow Jones Energy, noted that the entire global oil supply chain would need to recover: ships that have been taking long alternative routes to avoid the Strait of Hormuz would have to return to normal paths, and refineries would need to produce enough fuel to rebuild depleted stockpiles. That process could take months after a lasting peace deal.
"Coming back to those levels will require a return to normal crude production, shipping and refining of the entire global supply chain," Brito wrote.
And while $4 a gallon may feel like a bargain compared with recent months, AAA noted on its website that gasoline prices are still the highest they have ever been at this time of year.