The price of gasoline continued its downward plunge this week as the crude oil market stabilized and demand for gasoline – according to a survey conducted by AAA – remained low. The average price per gallon of regular gasoline in Connecticut was $4.09 on Wednesday, down 8 cents over the previous week and 89 cents from its peak of $4.98 on June 14.
The national average also continued its fall, according to AAA, dropping 10 cents over the past week to $3.94 on Wednesday, down from its peak of $5.01 on June 14. Wednesday’s national average was 59 cents less than it was a month ago, but was still 76 cents higher than a year ago. Connecticut’s average on Wednesday was 91 cents higher than a year ago, but the state’s 25-cent tax on each gallon is currently suspended to help consumers.
The state average was down 42 cents over the past month, AAA reported.
Demand for gasoline had remained high for several months despite rising prices, an aberration that AAA economists attributed to pent-up demand for travel following two summers of pandemic conditions. But over time, motorists apparently started watching their mileage, leading to a steady trend of price decreases.
“Falling pump prices may eventually lead to more drivers hitting the road again,” said Andrew Gross, AAA spokesperson. “But that hasn’t happened yet. Instead, many drivers are waiting for prices to fall further before reverting to their typical driving habits.”
AAA’s survey found that almost two-thirds of US adults had changed their driving habits since March, with driving less and combining errands coming in as the top two changes surveyed.
The Energy Information Administration (EIA) reported that gas demand rose from 8.54 million barrels per day to 9.12 million last week, but that rate is 307,000 barrels per day lower than last year.
The lowest price for a gallon of regular gasoline reported in Connecticut by users Wednesday on the free GasBuddy app was $3.49. That price was available at three locations in Rocky Hill, including:
- CITGO & Atlantis Fresh Market at 2720 Main St.
- Gulf at 2757 Main St., and;
- RoadRunners at 2204 Silas Deane Highway.
How Did We Get Here?
Crude oil prices jumped following the Russian invasion of Ukraine on Feb. 24. Crude Oil WTI was $92.81 per barrel on Feb. 24, according to various tracking services, but by March 8 it had raced up to $123.70 before a bumpy but generally downward ride to $99.76 on May 10.
Then on May 10, with the Russian invasion still well underway, the European Union announced that it would ban Russian oil exports within the next six months. Russia provides about 10% of the world’s crude oil, so the EU’s announcement sent the price of crude oil back up, peaking at $122.11 on June 8.
During that period, gasoline prices spiked around the world, including a new record average price per gallon here in the US of $5.016 on June 14. Connecticut’s average on the same date was also the highest ever at $4.984.
The price has since dropped below $90 per barrel, closing at around $88 on Wednesday, Aug. 17, and demand for gasoline in the US has been dropping off, accelerating the decrease in gas prices.
A Conflicting Poll & Biden Takes Steps
According to The Hill, President Joe Biden was faced with conflicting public opinion data in March regarding gas prices and the Russian invasion.
There was widespread approval for a ban on Russian crude oil imports, according to an ABC News/Ipsos poll, even though Biden warned that it could exacerbate energy costs here in the US. But the same poll showed that 70% of its respondents disapproved of Biden’s handling of gas prices.
While experts say most of the factors that influence gas prices are not within White House’s authority to control, Biden took five specific steps over the next several months to ease gas prices. The Hill and other news organizations reported the following:
- Over a period of several months, Biden ordered the release of a total of 180-million barrels of crude oil from the Strategic Patroleum Reserve;
- In April, Biden ordered the removal of restrictions on the sale of E15, which is fuel that is 15% ethanol, between June and September of this year in order to increase supply;
- Biden asked members of OPEC to increase production and exports in order to cover worldwide demand, but current relations with Saudi Arabia in particular are strained based on the kingdom’s human rights violations as well as the widely reported assassination of Saudi dissident journalist Jamal Khashoggi, who wrote for the Washington Post;
- Biden pressured US oil companies to start making use of some 9,000 approved drilling permits, and asked Congress to legislate a “use it or lose it” policy to impose fees on companies that fail to drill on land that they have leased for that purpose, and;
- The president continued promoting the nation’s transition to renewable energy.
Why Do We Import Crude Oil?
Financial analysts like Martin Tillier, who is a contributor to Nasdaq.com, have been speaking to the issue that comes up often when gas prices spike: If the US is the world’s largest producer of crude oil, why must we continue to depend on foreign oil?
In a piece dated March 8, 2022, just as oil prices peaked, Tillier explained the difference between crude oil extracted from most of the domestic oil fields in the US versus what is extracted in the Middle East and Russia – essentially, US crude is lighter and “sweeter” and as such, is harder and more expensive to refine. And he further suggests that there is not enough political will to change the status quo:
The problem is that for many years, imported oil met most of the US’s energy needs, so a large percentage of the refining capacity here is geared toward dealing with oil that is heavier and less sweet than the kind produced here.
A coordinated, forward-looking energy policy over the last few decades would have targeted that issue through subsidies and incentives. That money has been paid out anyway: it wouldn’t have been hard to use it to make America truly energy independent. However, politicians, it seems, would rather keep a situation where periodic energy crises give them a cudgel with which to beat an incumbent. Lest you think I am making a partisan point here, current criticism is of a Democrat by Republicans, but the last time crude was at these levels it was Democrats criticizing George W. Bush, a Republican, for policies and actions that they said forced oil higher back then.
–Financial Analyst Martin Tillier for Nasdq.com