(CNN) — Drivers in the United States have something to cheer regarding: a historic drop in gasoline prices.
Since fuel hit a record $5.02 per gallon on June 14, 2022, the national average price of regular gasoline has dropped every day, according to the American Automobile Association (AAA).
This streak of 70 consecutive days with falling prices at gas stations it is the second longest since 2005, Bespoke Investment Group said in a report it titled “America’s Great Summer of Falling Gas Prices.”
The national average for a gallon of regular gasoline plummeted to $3.89 on Tuesday, down from $4.38 a month earlier.
And while prices are 73 cents higher than last year, the recent drop is significant. Especially if we take into account the inflationary alarms triggered by the increase in the cost of gasoline above US$5 just two months ago.
The longest streak since 2005 was the 117-day streak that ended in January 2015, according to Bespoke. Now, the report notes that the percentage decline in gasoline prices so far this month is the steepest on record at this point in August.
Why are gasoline prices going down?
There are a number of factors behind the drop in gas prices this summer. And not all of them are positive.
First, the $5 maximum represented a turning point for many drivers, with some choosing to use their cars less. That decline in demand helped balance the market.
At the same time, fears of a US recession and concerns regarding China’s economy pushed oil prices down sharply. Which ended up dragging the fuel figures down.
On the supply side, the unprecedented release of emergency oil in the national reserve ordered by the Biden administration helped ease pressure on energy prices.
At its peak in mid-June, the national average for regular gasoline rose a staggering 50% for the year. But, with the summer slump, prices are now almost 19% higher this year. That’s just one percentage point more than the year-to-date average change for every year since 2005, according to Bespoke.
“Who would have thought during the spring that by late summer we would be seeing only an average year’s worth of increase in gasoline prices?” Bespoke analysts wrote in the report.
However, this streak of falling gasoline prices might end if oil costs continue to rise.
After falling to $86.53 a barrel, a nearly eight-month low, last week, US crude rose 3% on Tuesday. And it rose back above $93, signaling that OPEC and its allies might take action.
Saudi Arabia’s energy minister told Bloomberg News that OPEC+ might be forced to cut production. And he added that “extreme” volatility and illiquidity mean the futures market is increasingly “disconnected” from fundamentals.
An OPEC+ supply cut would mark a significant shift from the influential group of producers and might push oil prices higher.
