My fellow Patriots,
Why are gas prices continue to drop and is this a good thing or a bad thing?
If you have been paying attention to what you’re paying at the gas pump, you would know that you are paying less for gas at the pump towards the end of the month than what you were paying at the beginning of the month. The national average gas price has decreased, and it has been decreasing since the middle of the month of June 2022. On July 1st, 2022 the national average gas price was $4.842 and on July 31st, 2022 the national average gas price was $4.220. This is a $.622 decrease in the national average gas price over the course of thirty one days. As with the recording of the gas prices for the months of May and June, all gas price data is being pulled from AAA. The chart below gives the national average gas prices for the entire month of July, 2022.
The question that is on everyone’s mind is “why are the gas prices suddenly decreasing?”. I do not have a for-sure, 100% certain reason as to why the price of gas is decreasing, but I do have some different theories and factors that may be contributing to the decrease in gas prices. Before I get to different theories as to why the price of gas is decreasing, I need to quickly mention that the decrease in gas is not a good thing. None of the contributing factors to the decreasing gas prices will get gas to back to the prices were under President Trump in 2019 and into the beginning of 2020. Additionally, this decrease in gas seems to be mostly artificial and therefore when prices begin to increase, they will increase rapidly and to higher prices than they have previously been to. The same thing happens with inflation; if a government tries to artificially lower the prices of goods and price control, very quickly inflation will get worse as the industry collapses from unsustainable artificial prices. Thus the same thing will happen to the oil and gas industry.
Now for some of the theories and possible factors that may be contributing to the decrease in the national average gas price. In April, Biden signed as Executive Order to allow from June 1st-September 15th, 2022 the continued buying of E-15 gas, which is composed of 15% ethanol. Normally, E-15 gasoline cannot be bought during the summer, but this EO allows for E-15 to be purchases throughout the summer of 2022 in hopes to allow less strain on the price of unleaded gasoline, thus lowering the price of gas. This is a very plausible factor to the decrease in the gas prices. Another factor, which was discussed in last month’s gas price analysis, is that crude oil is being artificially traded at lower prices due to the fear of a recession, of which America is now officially in. As of the writing of this article, Brent Crude oil is being traded at $102.0 per barrel, according to OilPrice.com, which is much lower than it was at the beginning of June 2022, which was $122.8 per barrel.
Another factor to the decrease in gas prices is that many states have implemented gas tax holidays. New York and Illinois have implemented gas tax holidays. Missouri has a program that allows people to turn in their gas receipts for refunds, which would also lower the overall price of gas. Since all three of these states are major states that already have had high gas prices, a gas tax would drastically lower their gas prices thus having an impact on the national average gas price.
In reality, the lowering of the national average gas prices is probably caused by all three of the factors mentioned: summer use of E-15 gasoline, crude oil being artificially traded lower, and gas tax holidays. These three factors working in tandem together would very plausibly cause the national average gas price to decrease. As mentioned before, the artificial decrease of the price of gas is not sustainable in the long term and it will lead to the price of gas increasing drastically in the not-so-distant future, especially as the United States gets deeper into a recession.