Crude Oil, Gasoline Prices Fall to Four Year Low
Filling up your car’s gas tank is one of the inherent burdens many people face. According to estimates from GasBuddy, Americans spent $446.9 billion on gasoline in 2024, or roughly $2,500 per person.
Fortunately, for drivers, gasoline prices have been steadily declining. On Tuesday, the American Automobile Association (AAA) reported that the national average for a gallon of regular gas was at $3.05. This is down $0.13 from one month ago and is the lowest national average price since May 2021, more than four years ago. For perspective, the highest average price ever recorded for a gallon of regular gas was $5.02, set on June 14, 2022.
As one might expect, gas prices vary substantially across the 50 states. According to GasBuddy, California maintains its woeful distinction for the highest gas prices in the land. The statewide average is a scorching $4.61 per gallon, $1.56 (51%) above the national average. Hawaii comes in second at $4.47 per gallon followed by Washington ($4.40), Oregon ($3.96) and Alaska ($3.83).
The cheapest gas can be found in Texas, which is America’s largest oil-producing state. In the Lone Star State, the average price is just $2.57, or $0.48 (16%) below the national average. Rounding out the Top 5 cheapest states are No. 2 Oklahoma ($2.59) followed by Mississippi ($2.60), Louisiana ($2.61) and Arkansas ($2.63).
In Illinois, the average price is $3.24 per gallon, eleventh highest in the nation and $0.19 above the national average. In Chicago, the average price soars to $3.60 per gallon. Conversely, the average price in Iowa is a very wallet-friendly $2.87 per gallon, the nineteenth cheapest in the country and $0.18 below the national average.
Here in the Quad Cities, as with many things, the price you pay at the pump is heavily dependent on which side of the Mississippi River you fill up on. According to AAA, a gallon of regular gas on the Illinois side is $3.20. The Iowa side is $0.50 cheaper at $2.70.
One of the main drivers behind the decline in gas prices is a global surplus of crude oil. This excess supply is being led by the U.S., which continues to ramp up its crude oil production. In July, the U.S. Energy Information Administration (EIA) reported that U.S. crude oil production reached a record-high 422 million barrels. That equates to 13.6 million barrels per day.
The rise in U.S. crude oil production has helped send oil prices tumbling. West Texas Intermediate (WTI) is the benchmark grade of crude oil produced in the U.S. It serves as one of the three main pricing barometers of the global petroleum industry, alongside North Sea Brent and Dubai crude. On Tuesday, a barrel of WTI crude oil fell to $55.21, its lowest price in more than four years. So far this year, WTI crude oil has fallen 23%.
The U.S. is the world’s largest producer of crude oil, accounting for 22% of global production in 2024, according to the EIA. Saudi Arabia and Russia were No. 2 and No. 3, respectively. As part of his campaign to “Drill baby drill”, President Trump has pushed to further ramp up U.S. crude oil production. He has advocated for expanded drilling on land as well as within the Gulf of America, which accounts for roughly 97% of our nation’s offshore oil and gas production.
As we saw during his first term, Trump has used low crude oil prices to fight inflation. Nearly everything we do or purchase involves some aspect of energy use. From a barrel of crude oil we get gasoline, diesel fuel, jet fuel, kerosene and heating oil. It’s used in the production of plastics, lubricants, fertilizers, rubber and synthetic textiles, among many others. For businesses, lower energy prices reduce the cost of manufacturing, transportation, warehousing and operating costs. For consumers, it translates to lower costs at the checkout counter.
Trump’s goal to reduce energy prices is not without its challenges. Crude oil, like many global commodities, is subject to the global forces of supply and demand. Foreign conflicts and geopolitical events can quickly change the outlook for energy prices. But, for now, filling up at the gas pump has become a bit less painful.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
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