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Gasoline costs more these days, but price spikes have a long history and happen for a host of reasons

Americans are acutely sensitive to gasoline prices , especially when they’re on the rise. One reason, of course, is that we buy a lot of gas: an estimated 570 gallons this year for the average driver, which at current national average prices would cost close to $2,000. Also, gas prices are posted all over town on large signs – unlike, say,  milk prices  – and people typically buy gas on its own rather than as part of a larger shopping trip, making price changes more noticeable. And gas prices can and do swing sharply and unpredictably, in ways that can seem unconnected to the rest of the economy.

Regular gas costs, on average, 58.7% more than it did a year ago this time – $3.491 a gallon last month, versus $2.20 in November 2020, according to the federal  Energy Information Administration (EIA).

But looking just at the recent rise can be misleading, or at least incomplete. For one thing, a year ago the United States was battling yet another wave of COVID-19 cases, large parts of the economy were still shuttered and demand for gas was way down. Estimated consumption in 2020 was 534 gallons per driver, down 14.4% from 624 gallons in 2019.

Every time gasoline prices spike, people seek explanations and solutions. While the Biden administration has responded to the current runup by urging regulators to  investigate oil and gas companies  and by  releasing 50 million barrels  from the Strategic Petroleum Reserve, we wanted to place current conditions in a broader – and longer – perspective.

Our main source for gasoline price data was the  U.S. Energy Information Administration (EIA), the statistical arm of the Department of Energy. When looking at long-term price trends, we adjusted prices for inflation using the  Consumer Price Index Retroactive Series  from the federal Bureau of Labor Statistics; the R-CPI-U-RS, as it’s known, estimates what inflation would have been in prior years if current methods had been in use.

The EIA also provides data on how much gasoline is used in the United States. To estimate full-year consumption for 2021, we calculated the ratio of this year’s consumption through September to the first nine months of 2020, then applied that ratio to 2020’s full-year consumption total.

The  Federal Highway Administration  compiles data from states on licensed drivers, but its most recent figures are from 2019. To estimate the total number of U.S. licensed drivers in 2020 and 2021, we applied the average growth rate over the previous five years to the 2019 total. We then divided our estimated total gas consumption by the estimated total number of licensed drivers to arrive at an estimate for how much gas the typical driver will use in 2021.

Also, the volatility of gas prices means they can go down as sharply and as suddenly as they go up. In the spring of 2020, as the COVID-19 pandemic sparked widespread lockdowns, the average gas price sank 27% between Feb. 24 and April 27. Since 1994, average gas prices have fluctuated between a low of 96.2 cents a gallon in February 1999 and a high of $4.114 in July 2008. The current average price, in fact, is almost exactly what it was in September 2014 – at least on a nominal basis.

When inflation is factored in, today’s prices appear more modest. In today’s dollars, gas cost an average of $5.20 a gallon in June 2008, and more than $4 as recently as September 2014.

Also, gasoline is not a single, uniform product. Besides regular, midgrade and premium gas, which differ by octane rating, there’s conventional and “reformulated” gas. The latter is required to be sold in California, along the Northeastern seaboard and in several other major urban areas to reduce  smog and other air pollutants .

Over the past year, reformulated gas was consistently 30 to 35 cents more expensive than conventional gas until mid-October, when the differential began to widen, according to an analysis of EIA price data – it’s­ now about 46 cents more expensive. Over the same period, midgrade gas has ranged from 37 cents to 46 cents more expensive than regular, while premium has been 25 to 27 cents higher than midgrade.

Where you buy gas also matters. Much of the U.S. petroleum industry is concentrated along the Gulf Coast, making it perhaps unsurprising that gas tends to be cheapest there. The average price in that region was $3.072 a gallon in late November, and in Texas it was also a hairsbreadth above $3.

By contrast, California almost always has the most expensive gas in the country. The state’s average price in late November was $4.642 a gallon, and in San Francisco it was $4.816. Besides the fact that California already uses pricier reformulated gas and has relatively high  gas taxes and environmental fees , it is geographically far removed from other refining centers and relatively few fuel pipelines cross the Rocky Mountains to connect California’s refineries to the rest of the country.

Under normal conditions, the state’s refineries can produce enough gasoline to meet demand there, according to the  California Energy Commission . But if refineries go offline due to weather, accidents or mechanical breakdowns, the state typically imports gasoline from overseas – adding to the price because of the cost of marine shipments.

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117 Gas Prices Essay Topic Ideas & Examples

Inside This Article

Gas prices are a hot topic that affects everyone's daily lives. Whether you're a driver, a commuter, or just someone who likes to stay informed about current events, gas prices can have a big impact on your wallet. With that in mind, we've put together a list of 117 gas prices essay topic ideas and examples to help inspire your next writing project.

• The impact of gas prices on the economy
• How gas prices affect consumer behavior
• The relationship between gas prices and inflation
• The role of government regulation in determining gas prices
• The impact of gas prices on the environment
• The effects of fluctuating gas prices on the stock market
• The influence of geopolitical events on gas prices
• The future of gas prices in a world moving towards renewable energy
• Gas prices and income inequality
• The impact of gas prices on rural communities
• Gas prices and the automotive industry
• The impact of gas prices on public transportation ridership
• Gas prices and urban planning
• The relationship between gas prices and food prices
• Gas prices and the cost of living
• The impact of gas prices on tourism
• The effects of gas prices on small businesses
• Gas prices and the gig economy
• The impact of gas prices on long-distance relationships
• Gas prices and the sharing economy
• The effects of gas prices on the shipping industry
• The relationship between gas prices and car sales
• Gas prices and the rise of electric vehicles
• The impact of gas prices on ride-sharing services
• Gas prices and the rise of telecommuting
• The effects of gas prices on the airline industry
• Gas prices and the rise of remote work
• The relationship between gas prices and road maintenance
• Gas prices and the rise of carpooling
• The impact of gas prices on public health
• Gas prices and the rise of bike commuting
• The effects of gas prices on city planning
• Gas prices and the rise of walking as a mode of transportation
• The relationship between gas prices and car insurance rates
• Gas prices and the rise of autonomous vehicles
• The impact of gas prices on car maintenance costs
• Gas prices and the rise of car-sharing services
• The effects of gas prices on carpool lanes
• Gas prices and the rise of car subscription services
• The relationship between gas prices and road congestion
• Gas prices and the rise of electric scooters
• The impact of gas prices on air quality
• Gas prices and the rise of electric bikes
• The effects of gas prices on parking availability
• Gas prices and the rise of public bike-sharing programs
• The relationship between gas prices and traffic accidents
• Gas prices and the rise of e-scooter sharing services
• The impact of gas prices on greenhouse gas emissions
• Gas prices and the rise of micro-mobility options
• The effects of gas prices on traffic noise levels
• Gas prices and the rise of electric skateboards
• The relationship between gas prices and traffic fatalities
• Gas prices and the rise of electric mopeds
• The impact of gas prices on traffic congestion
• Gas prices and the rise of electric wheelchairs
• The effects of gas prices on road rage incidents
• Gas prices and the rise of electric tricycles
• The relationship between gas prices and road rage incidents
• Gas prices and the rise of electric unicycles
• The impact of gas prices on road maintenance budgets
• Gas prices and the rise of electric scoot-cars
• The effects of gas prices on public transit budgets
• Gas prices and the rise of electric cargo bikes
• The relationship between gas prices and public transportation ridership
• Gas prices and the rise of electric cargo trikes
• The impact of gas prices on public transportation fare hikes
• Gas prices and the rise of electric cargo vans
• The effects of gas prices on public transportation service cuts
• Gas prices and the rise of electric cargo trucks
• The relationship between gas prices and public transportation reliability
• Gas prices and the rise of electric cargo planes
• The impact of gas prices on public transportation accessibility
• Gas prices and the rise of electric cargo ships
• The effects of gas prices on public transportation safety
• Gas prices and the rise of electric cargo drones
• The relationship between gas prices and public transportation sustainability
• Gas prices and the rise of electric cargo boats
• The impact of gas prices on public transportation equity
• Gas prices and the rise of electric cargo trains 80

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How Gas Prices Affect the Economy

Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Volatile gas prices have taken center stage in the media as the national average for a gallon of regular gasoline has experienced wild price swings over the past few years.

In the past, geopolitical tensions, hurricane seasons, flooding in the Mississippi, and increased travel demand during the summer driving season were forces pushing prices higher. At the individual level, higher gas prices mean that each of us pays more at the pump , leaving less to spend on other goods and services. But higher gas prices affect more than just the cost to fill up at the gas station; higher gas prices have an effect on the broader economy.

Inversely, when gas prices fall, it is cheaper to fill up the tank for both households and businesses and really eases costs on transportation-focused industries like airlines and trucking—but it also puts a damper on the domestic oil industry.

In general, higher oil prices are a drag on the economy. Here we will focus on some of the direct and indirect negative effects of high gas prices.

Key Takeaways

• When gas prices rise, it can be a drag on the economy—impacting everything from consumer spending to the price of airline tickets to hiring practices.
• Gas is an important input for transportation, which directly impacts households as they drive, but also businesses that rely on logistics and transportation chains around the globe.
• If discretionary spending is hampered by higher gasoline costs, it can have knock-on effects throughout the broader economy.

A side effect of high gas prices is that the discretionary spending of consumers drops as they spend a relatively larger portion of their income on gasoline. Higher prices also mean that shoppers will tend to drive less—including places like the mall or shopping centers. Indeed, academic and industry studies provide support for this, showing that driving miles are directly tied to gas prices.  

While shoppers may not drive, they do switch to online shopping more when gas prices rise. According to Marin Software, searches for online shopping increase dramatically along with an increase in gas prices.  

However, all retailers are further squeezed as they are forced to pass on the higher expenses they also experience, which are associated with increased shipping costs to consumers. Anything that has to be shipped or transported—from apples to electronics—could cost more as gas prices rise. This is especially true for products, or components for products, that are manufactured overseas. Likewise, many products that contain plastics or synthetic materials are based in part on petroleum and refining. Higher oil prices mean higher prices for these materials too.

Higher gas prices can result in noticeable increases in some public transportation ridership. Shared and public transportation may become more appealing if gas prices continue to rise as it provides a more cost-effective alternative to sitting in traffic with expensive fuel in the tank.

As a historical example, according to the American Public Transportation Association, the Raleigh-Durham-Chapel Hill region of North Carolina saw an 18% increase in riders for the express bus that connects the three cities during April 2011, compared to the same month in 2010—a period that saw gas prices rise sharply. Likewise, during the same period, riders on New Mexico's Rail Runner, a commuter train that provides service between Santa Fe and Albuquerque, increased by 14%.  

Not all commuters have the flexibility to make this decision, but for some, it has provided a welcome opportunity to save on weekly commuting expenses .

The automobile industry has historically responded to rising gasoline prices by using these periods as opportunities to manufacture smaller, more fuel-efficient cars, such as hybrids and, most recently, all-electric cars that can travel up to 250 miles between charges. Consumers have largely supported this move; sales of hybrids and all-electric vehicles in the United States have been on a strong upward trajectory since 2010, while sales of gas guzzlers like large trucks and SUVs have lagged behind.

The largest  operating cost  for airlines, on average, are the companies' fuel expenses and those expenses related to the  procurement  of oil. Fuel costs are such a large part of an airline's overhead percentage-wise that the fluctuating price of oil greatly affects the airline's  bottom line . When gas prices rise, airlines are forced to increase the price offered to travelers for flights, which may discourage non-essential air travel and put a further burden on consumers' wallets.

To protect themselves from volatile oil costs, and sometimes to even take advantage of rising gas prices, airlines commonly engage in the practice of fuel  hedging . They do this by buying or selling the expected future price of oil through a range of  investment products , protecting the airline companies against rising prices.

Job growth is carefully watched as an indicator of the recovering economy. And some economists warn that rising gas prices could negatively impact an economic recovery in terms of hiring practices. Rising gas prices may force some businesses to re-evaluate their hiring plans, holding off because they are uncertain about the economy's health. Less discretionary spending results in decreased sales, both of which can influence a company's ability to hire.

Many job candidates have to weigh prospective positions against the costs associated with the commute. Some workers who have been offered new jobs have been forced to turn down the position simply because the costs to get to and from work would eat up such a large percentage of the salary. Freelancers can also be affected by higher gas prices, limiting the geographical region in which they will do business because commuting costs make it impossible for some gigs to be profitable.

Though economists and analysts may argue about the extent to which gas prices have an effect on the economy, there is, at the least, a correlation between consumer confidence , spending habits, and gas prices. An August 2020 Gallup poll in the United States, for example, showed that individuals' views of the economy appear to be inversely correlated to the price of gasoline. The poll showed that increases in state gas prices made respondents feel more pessimistic about the economy over the time period in question.

Congressional Budget Office (CBO). " January 2008 Effects of Gasoline Prices on Driving Behavior and Vehicle Markets ."

Marin Software. " Marketing Insights: Higher Energy Prices Spell Dollar$ for Google? "

CNN Money. " Gas prices push commuters to the train ."

Bureau of Transportation Statistics. " Hybrid-Electric, Plug-in Hybrid-Electric and Electric Vehicle Sales ."

Gallup. " Gas Prices and Consumer Sentiment ."

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Rising Oil and Gas Prices Add to U.S. Economic Challenges

Experts say a period of costlier fuel is likely to be brief. But if consumers start to assume otherwise, it could mean problems for Biden and the Fed.

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By Ben Casselman and Clifford Krauss

As the U.S. economy struggles to emerge from its pandemic-induced hibernation, consumers and businesses have encountered product shortages, hiring difficulties and often conflicting public health guidance, among other challenges.

Now the recovery faces a more familiar foe: rising oil and gasoline prices .

West Texas Intermediate, the U.S. oil-price benchmark, hit $76.98 a barrel on Tuesday, its highest level in six years, as OPEC, Russia and their allies again failed to agree on production increases. Prices moderated later in the day but remained nearly $10 a barrel higher than in mid-May.

Reflecting the increase in crude prices, the average price of a gallon of regular gasoline in the United States has risen to $3.13, according to AAA, up from $3.05 a month ago. A year ago, as the coronavirus kept people home, gas cost just $2.18 a gallon on average. The auto club said on Tuesday that it expected prices to increase another 10 to 20 cents through the end of August.

The price of a gallon of gas

The rapid run-up comes at a delicate moment for the U.S. economy, which was already experiencing the fastest inflation in years amid resurgent consumer activity and supply-chain bottlenecks. And it could cause a political headache for President Biden as he tries to convince the public that his policies are helping the country regain its footing.

Asked about oil prices at a White House news conference on Tuesday, Jen Psaki, the press secretary, said the administration was monitoring the situation and had been in touch with officials from Saudi Arabia and other major producers. But she suggested that the president had limited control over gas prices .

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Gas Prices in the United States: Supply and Demand Essay

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The United States recently saw a significant increase in retail gasoline prices. According to the official data, the previous decline was conditional upon the response to the pandemic, which caused lower demand as well as low crude oil costs combined with critical supply constraints (“The Week in Petroleum”). Therefore, this event positively correlates with the efficiency of measures implemented against COVID-19 and the elimination of travel restrictions.

The comparison of indicators before the spread of COVID-19 and over the following year shows the dependency of supply and demand on external factors. Thus, the former shifting indicators were affected by cold weather outages throughout the country, which was followed by rising imports, whereas the latter was determined by the low mobility of citizens (“The Week in Petroleum”). In this way, the environment was the principal aspect, which allowed for predicting changes in this field.

At present, the ongoing recovery defines the gas prices in the United States, which are gradually increasing. By now, regular retail rates were reported to be on average 92 cents higher compared to the previous year (“The Week in Petroleum”). This tendency also corresponds to the considerations of evolving supply and demand, which fluctuate depending on seasons or regions (“The Week in Petroleum”). Therefore, the decline in inventories alongside the increasing mobility of people allows for predicting further growth of these indicators.

In conclusion, the described trends in gasoline prices are aligned with changes in demand and supply. Due to the pandemic, the presence of large inventories and unfavorable conditions for their realization was combined with travel restrictions. As a result, the retail rates were low, and a dramatic change happened as soon as the latter barriers were lifted. Thus, the consideration of profits alongside the growing needs of people in gasoline confirms new patterns of price formation in the United States in the long run.

“ The Week in Petroleum. ” The U.S. Energy Information Administration . 2021. Web.

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Essay Samples on Gas Prices

The impact of high gasoline prices on various fields.

The fluctuations in gasoline prices have a significant and widespread impact on economies, societies, and individual households. This essay explores the multifaceted impact of high gasoline prices, encompassing economic effects, environmental considerations, and social implications. Economic Effects High gasoline prices can have far-reaching economic repercussions....

The Advantages And Disadvantages Of Gas Cars Vs. Electric Cars

Introduction Is there ever a time that business should have precedent over the environment? Businesses of different types have been around since man’s beginning, and they have proven to be beneficial and profitable and at other times harmful and unfavorable. In the movie Hoot, a...

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Positive And Negative Impacts Of Increased Gas Prices In The U.s.

In 1929, our nation suffered throughout what we call, The Great Depression. This lead an influnctuation throughout the world, creating gas prices to increase. Gas prices have recently changed massively all around our society; making no other option but to consume the gas, for it...

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My Personal Opinion On Why Gas Prices Should Be Cheaper

There are many forms of transportation consisting of trains, public buses, and cars. What these vehicles have in common is that in order to function they need gasoline. Many refineries were down and tight in supply therefore causing an increase. Gasoline prices have gone from...

Getting Rid Of Gasoline Vehicles As The Best Solution To The High Gas Prices Issue

Gas prices are always going up, and often fluctuate from a day-to-day basis, regardless if it is a pump or wholesale location. This fluctuation is often due to a culmination of factors, including politics. This means that our current fossil fuel situation is a very...

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Reasons Why We Should Quit Using Gas

Cover Letter As a concerned citizen I believe that there is a crisis coming that everyone should be worried about. Which is gas and how its only a matter of time before it runs out for good and the effect of rising gas prices. My...

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The Prices of Oil, Gas and Coal as the Causes of Economical Changes

As of late, the crude oil price has changed everywhere throughout the world. A few issues have risen because of the higher oil costs. A typical issue is human beings need to spend more than before for their everyday utilization of oil. In the news,...

Electric Car Gas: Zero-Emission Vehicles Adoption

Electric powered motors outsold gas and diesel fashions in Norway for the first time ever final month, accounting for fifty eight.four% of all automobile sales. Norway is a leader in the adoption of zero-emission automobiles and the government has set an formidable purpose. whilst electric...

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Economic Challenges in Oil and Gas Industry

The report is devoted to the analysis of the issues of oil and gas industry, and revealing some trends. One of the biggest issues today is volatility. It means that it takes more time for production enterprises to consider the unpredictability factors in terms of...

Best topics on Gas Prices

1. The Impact of High Gasoline Prices on Various Fields

2. The Advantages And Disadvantages Of Gas Cars Vs. Electric Cars

3. Positive And Negative Impacts Of Increased Gas Prices In The U.s.

4. My Personal Opinion On Why Gas Prices Should Be Cheaper

5. Getting Rid Of Gasoline Vehicles As The Best Solution To The High Gas Prices Issue

6. Reasons Why We Should Quit Using Gas

7. The Prices of Oil, Gas and Coal as the Causes of Economical Changes

8. Electric Car Gas: Zero-Emission Vehicles Adoption

9. Economic Challenges in Oil and Gas Industry

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Impact of Gas Prices on Consumer Sales

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The Economic Implications of High Gas Prices

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Essays on Gas Prices

Gasoline prices are a hot-button political issue, with the oil industry and politicians trading blame for soaring costs. But there's no one person or group responsible for gasoline prices — instead, the price you pay at the pump is determined by a variety of factors.How Gasoline Prices Are Determined The price...

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Why the Era of High Gas Prices Is Supposedly Ending) In some cases, drivers wont benefit room the decline in wholesale gas prices because consumer prices will be flat or even higher thanks to rising gas taxes Imposed at the state level. Essentially. As of January 1, the gas tax in Pennsylvania increases by 9. […]

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US gas prices are falling. Experts point to mild demand at the pump ahead of summer travel

Motorist pass posted gas prices, Monday, June 10, 2024, in San Antonio. Gas prices are once again on the decline across the U.S., bringing some relief to drivers now paying a little less to fill up their tanks. (AP Photo/Eric Gay)

FILE - A customer stops for fuel at a gas station in Northbrook, Ill., on April 18, 2024. Gas prices are once again on the decline across the U.S. — bringing some ease to drivers at a time of year when it usually costs a little more to fill up your tank. (AP Photo/Nam Y. Huh, File)

Gas prices are posted, Monday, June 10, 2024, in San Antonio. Gas prices are once again on the decline across the U.S., bringing some relief to drivers now paying a little less to fill up their tanks. (AP Photo/Eric Gay)

A motorist fills up the tank of a vehicle at a gasoline pump at a Costco warehouse Friday, May 31, 2024, in Aurora, Colo. Gas prices are once again on the decline across the U.S. — bringing some ease to drivers at a time of year when it usually costs a little more to fill up your tank. (AP Photo/David Zalubowski)

FILE - A car drives past Marathon Oil’s Los Angeles Refinery complex in Carson, Calif., May 29, 2024. Gas prices are once again on the decline across the U.S. — bringing some ease to drivers now paying a little less to fill up their tanks. (AP Photo/Damian Dovarganes, File)

A station’s gas prices are displayed on a pump, Monday, June 10, 2024, in San Antonio. Gas prices are once again on the decline across the U.S., bringing some relief to drivers now paying a little less to fill up their tanks. (AP Photo/Eric Gay)

A station’s gas prices are displayed Monday, June 10, 2024, in San Antonio. Gas prices are once again on the decline across the U.S., bringing some relief to drivers now paying a little less to fill up their tanks. (AP Photo/Eric Gay)

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NEW YORK (AP) — Gas prices are once again on the decline across the U.S., bringing some relief to drivers now paying a little less to fill up their tanks.

The national average for gas prices on Monday stood around $3.44, according to AAA. That’s down about 9 cents from a week ago — marking the largest one-week drop recorded by the motor club so far in 2024. Monday’s average was also more than 19 cents less than it was a month ago and over 14 cents below the level seen this time last year.

Why the recent fall in prices at the pump? Industry analysts point to a blend of lackluster demand and strong supply — as well as relatively mild oil prices worldwide.

Here’s a rundown of what you need to know.

Today’s falling gas prices, explained.

There are a few factors contributing to today’s falling gas prices. For starters, fewer people may be hitting the road.

“Demand is just kind of shallow,” AAA spokesperson Andrew Gross said, pointing to trends seen last year and potential lingering impacts of the COVID-19 pandemic. “Traditionally — pre-pandemic — after Memorial Day, demand would start to pick up in the summertime. And we just don’t see it anymore.”

Last week, data from the Energy Information Administration showed that U.S. gasoline demand slipped to about 8.94 million barrels a day. That might still sound like a lot — but before the pandemic, consumption could reach closer to the 10 million barrel-a-day range at this time of year, Gross noted.

Beyond pandemic-specific impacts, experts note that high gas prices seen following Russia’s invasion of Ukraine in 2022 and persistent inflation may have led many Americans to modify their driving habits. Other contributing factors could be the increased number of fuel-efficient cars, as well as electric vehicles, on the road today, Gross said.

Some of this is still seasonal. Patrick De Haan, head of petroleum analysis at GasBuddy, noted that gas prices typically ease in early summer because of refinery capacity. At this time of year, he said, many factors boosting prices in late winter and early spring — particularly refinery maintenance — are no longer present.

“Once refinery maintenance is done, output or utilization of the nation’s refineries goes up — and that contributes to rising supply,” De Haan said. And that stronger supply, paired with weaker consumption, has led to a “bit more noticeable” decline in prices this year. He added that U.S. refinery utilization is at some of its highest levels since the pandemic.

Separately, the Biden administration announced last month that it would be releasing 1 million gasoline barrels , or about 42 million gallons, from a Northeast reserve with an aim of lowering prices at the pump this summer. But De Haan noted that such action has little impact nationally — 42 million gallons equals less than three hours of U.S. daily gas consumption.

“Really, what we’re seeing right now with (declining) gasoline prices ... has been driven primarily by seasonal and predictable economics,” he said.

What about oil prices?

Experts also point to cooling oil costs. Prices at the pump are highly dependent on crude oil , which is the main ingredient in gasoline.

West Texas Intermediate crude, the U.S. benchmark, has stayed in the mid $70s a barrel over recent weeks — closing at under $78 a barrel Monday. That’s “not a bad place for it to be,” Gross said, noting that the cost of crude typically needs to go above $80 to put more pressure on pump prices.

Oil prices can be volatile and hard to predict because they’re subject to many global forces. That includes production cuts from OPEC and allied oil producing countries, which have previously contributed to rising energy prices .

OPEC+ recently announced plans to extend three different sets of cuts totaling 5.8 million barrels a day — but the alliance also put a timetable on restoring some production, “which is likely why the price of oil had somewhat of a bearish reaction,” De Haan said.

Could prices go back up?

The future is never promised. But, if there are no major unexpected interruptions, both Gross and De Haan say that prices could keep working their way down.

At this time of year, experts keep a particular eye out for hurricane risks — which can cause significant damage and lead refineries to power down.

“Prices move on fear,” Gross said. In the U.S., he added, concern particularly rises once a hurricane enters the Gulf of Mexico — and even if it doesn’t eventually make landfall, refineries may pull back on operations out of caution. Impacts can also range by region.

But barring the unexpected, analysts like De Haan expect the national average to stay in the range of $3.35 to $3.70 per gallon this summer. Gas prices typically drop even more in the fall, and it’s possible that we could see the national average below $3 in late October or early November, he said.

What states have the lowest gas prices today?

While gas prices nationwide are collectively falling, some states always have cheaper averages than others, due to factors ranging from nearby refinery supply to local fuel requirements.

As of Monday, per AAA data, Mississippi had the lowest average gas price at about $2.94 per gallon — followed by $2.95 Oklahoma and just under $2.97 in Arkansas.

Meanwhile, California, Hawaii and Washington had the highest average prices on Monday — at about $4.93, $4.75 and $4.41 per gallon, respectively.

This story has been corrected to note that U.S. gasoline demand has slipped to about 8.94 million barrels a day, not billion.

Watch CBS News

Gas prices are falling along with demand, despite arrival of summer

By Khristopher J. Brooks

Edited By Anne Marie Lee

June 11, 2024 / 3:27 PM EDT / CBS News

Gas prices are falling across the nation, a pleasant surprise for U.S. drivers as fuel prices typically surge this time of year.

The average price for regular unleaded gas in the U.S. was $3.44 per gallon on Monday, down roughly 9 cents from a week ago, according to AAA. That's 19 cents less than a month ago and 14 cents less than last year, according to the auto club. 

Gas prices are falling because demand for fuel has weakened and oil prices have tapered off, energy experts said, an unusual set of circumstances for the summer season when fuel demands generally peak as more Americans go on road trips for vacation.

"Not only have gasoline prices plummeted in nearly every state in the last week, but nearly every state has also seen prices drop compared to a month ago," Patrick De Haan, head of petroleum analysis at GasBuddy, said in a note Monday. "With the declines, Americans will spend roughly $425 million less per week on gasoline than a year ago."

Americans cut back on travel

Gasoline demand slipped to about 8.94 billion barrels a day last week, down from 10 billion barrels needed per day this same time last year,  according to the U.S. Energy Information Administration. One reason fuel demand has fallen appears to be that Americans are not traveling as much as they used to, noted one expert.

"Demand is just kind of shallow," AAA spokesperson Andrew Gross said. "Traditionally — pre-pandemic — after Memorial Day, demand would start to pick up in the summertime. And we just don't see it anymore."

To be sure, Americans are pinching their wallets tighter due to sticky inflation which is leading many consumers to change their habits . Demand for gas is also down as more drivers have opted for electric or hybrid vehicles, experts said. 

The drop in gas prices is also notable given that oil companies are now switching to their summer blend of fuel, which is uniquely designed to not evaporate as quickly in warmer weather.  Refineries make more than 14 kinds of summer blend  due to different state regulations, making the production process even longer, thus driving up prices.

Additional factors fueling price decline

Still, other factors are also at play. The Biden administration last month announced that it would release 1 million gasoline barrels , or about 42 million gallons, from a Northeast reserve with the aim of lowering prices at the pump.

Experts also point to cooling oil costs. Prices at the pump are highly dependent on crude oil, which is the main ingredient in gasoline. West Texas Intermediate crude, the U.S. benchmark, has stayed in the mid $70s a barrel over recent weeks, closing at under $78 a barrel on Monday. That's "not a bad place for it to be," Gross said.

"This price-decline party is ramping up, and I expect additional declines ahead of July 4 for both gasoline and diesel prices," De Haan said. 

Oil prices can be volatile and hard to predict because they're subject to many global forces. That includes production cuts from OPEC and allied oil-producing countries, which have previously contributed to rising energy prices.

— The Associated Press contributed to this report.

Khristopher J. Brooks is a reporter for CBS MoneyWatch. He previously worked as a reporter for the Omaha World-Herald, Newsday and the Florida Times-Union. His reporting primarily focuses on the U.S. housing market, the business of sports and bankruptcy.

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Overview and key findings

Tracking cop28 progress.

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• Latin America and the Caribbean
• European Union
• Middle East
• Japan and Korea
• Southeast Asia

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IEA (2024), World Energy Investment 2024 , IEA, Paris https://www.iea.org/reports/world-energy-investment-2024, Licence: CC BY 4.0

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The world now invests almost twice as much in clean energy as it does in fossil fuels…, global investment in clean energy and fossil fuels, 2015-2024, …but there are major imbalances in investment, and emerging market and developing economies (emde) outside china account for only around 15% of global clean energy spending, annual investment in clean energy by selected country and region, 2019 and 2024, investment in solar pv now surpasses all other generation technologies combined, global annual investment in solar pv and other generation technologies, 2021-2024, the integration of renewables and upgrades to existing infrastructure have sparked a recovery in spending on grids and storage, investment in power grids and storage by region 2017-2024, rising investments in clean energy push overall energy investment above usd 3 trillion for the first time.

Global energy investment is set to exceed USD 3 trillion for the first time in 2024, with USD 2 trillion going to clean energy technologies and infrastructure. Investment in clean energy has accelerated since 2020, and spending on renewable power, grids and storage is now higher than total spending on oil, gas, and coal.

As the era of cheap borrowing comes to an end, certain kinds of investment are being held back by higher financing costs. However, the impact on project economics has been partially offset by easing supply chain pressures and falling prices. Solar panel costs have decreased by 30% over the last two years, and prices for minerals and metals crucial for energy transitions have also sharply dropped, especially the metals required for batteries.

The annual World Energy Investment report has consistently warned of energy investment flow imbalances, particularly insufficient clean energy investments in EMDE outside China. There are tentative signs of a pick-up in these investments: in our assessment, clean energy investments are set to approach USD 320 billion in 2024, up by more 50% since 2020. This is similar to the growth seen in advanced economies (+50%), although trailing China (+75%). The gains primarily come from higher investments in renewable power, now representing half of all power sector investments in these economies. Progress in India, Brazil, parts of Southeast Asia and Africa reflects new policy initiatives, well-managed public tenders, and improved grid infrastructure. Africa’s clean energy investments in 2024, at over USD 40 billion, are nearly double those in 2020.

Yet much more needs to be done. In most cases, this growth comes from a very low base and many of the least-developed economies are being left behind (several face acute problems servicing high levels of debt). In 2024, the share of global clean energy investment in EMDE outside China is expected to remain around 15% of the total. Both in terms of volume and share, this is far below the amounts that are required to ensure full access to modern energy and to meet rising energy demand in a sustainable way.

Power sector investment in solar photovoltaic (PV) technology is projected to exceed USD 500 billion in 2024, surpassing all other generation sources combined. Though growth may moderate slightly in 2024 due to falling PV module prices, solar remains central to the power sector’s transformation. In 2023, each dollar invested in wind and solar PV yielded 2.5 times more energy output than a dollar spent on the same technologies a decade prior.

In 2015, the ratio of clean power to unabated fossil fuel power investments was roughly 2:1. In 2024, this ratio is set to reach 10:1. The rise in solar and wind deployment has driven wholesale prices down in some countries, occasionally below zero, particularly during peak periods of wind and solar generation. This lowers the potential for spot market earnings for producers and highlights the need for complementary investments in flexibility and storage capacity.

Investments in nuclear power are expected to pick up in 2024, with its share (9%) in clean power investments rising after two consecutive years of decline. Total investment in nuclear is projected to reach USD 80 billion in 2024, nearly double the 2018 level, which was the lowest point in a decade.

Grids have become a bottleneck for energy transitions, but investment is rising. After stagnating around USD 300 billion per year since 2015, spending is expected to hit USD 400 billion in 2024, driven by new policies and funding in Europe, the United States, China, and parts of Latin America. Advanced economies and China account for 80% of global grid spending. Investment in Latin America has almost doubled since 2021, notably in Colombia, Chile, and Brazil, where spending doubled in 2023 alone. However, investment remains worryingly low elsewhere.

Investments in battery storage are ramping up and are set to exceed USD 50 billion in 2024. But spending is highly concentrated. In 2023, for every dollar invested in battery storage in advanced economies and China, only one cent was invested in other EMDE.

Investment in energy efficiency and electrification in buildings and industry has been quite resilient, despite the economic headwinds. But most of the dynamism in the end-use sectors is coming from transport, where investment is set to reach new highs in 2024 (+8% compared to 2023), driven by strong electric vehicle (EV) sales.

The rise in clean energy spending is underpinned by emissions reduction goals, technological gains, energy security imperatives (particularly in the European Union), and an additional strategic element: major economies are deploying new industrial strategies to spur clean energy manufacturing and establish stronger market positions. Such policies can bring local benefits, although gaining a cost-competitive foothold in sectors with ample global capacity like solar PV can be challenging. Policy makers need to balance the costs and benefits of these programmes so that they increase the resilience of clean energy supply chains while maintaining gains from trade.

In the United States, investment in clean energy increases to an estimated more than USD 300 billion in 2024, 1.6 times the 2020 level and well ahead of the amount invested in fossil fuels. The European Union spends USD 370 billion on clean energy today, while China is set to spend almost USD 680 billion in 2024, supported by its large domestic market and rapid growth in the so-called “new three” industries: solar cells, lithium battery production and EV manufacturing.

Overall upstream oil and gas investment in 2024 is set to return to 2017 levels, but companies in the Middle East and Asia now account for a much larger share of the total

Change in upstream oil and gas investment by company type, 2017-2024, newly approved lng projects, led by the united states and qatar, bring a new wave of investment that could boost global lng export capacity by 50%, investment and cumulative capacity in lng liquefaction, 2015-2028, investment in fuel supply remains largely dominated by fossil fuels, although interest in low-emissions fuels is growing fast from a low base.

Upstream oil and gas investment is expected to increase by 7% in 2024 to reach USD 570 billion, following a 9% rise in 2023. This is being led by Middle East and Asian NOCs, which have increased their investments in oil and gas by over 50% since 2017, and which account for almost the entire rise in spending for 2023-2024.

Lower cost inflation means that the headline rise in spending results in an even larger rise in activity, by approximately 25% compared with 2022. Existing fields account for around 40% total oil and gas upstream investment, while another 33% goes to new fields and exploration. The remainder goes to tight oil and shale gas.

Most of the huge influx of cashflows to the oil and gas industry in 2022-2023 was either returned to shareholders, used to buy back shares or to pay down debt; these uses exceeded capital expenditure again in 2023. A surge in profits has also spurred a wave of mergers and acquisitions (M&A), especially among US shale companies, which represented 75% of M&A activity in 2023. Clean energy spending by oil and gas companies grew to around USD 30 billion in 2023 (of which just USD 1.5 billion was by NOCs), but this represents less than 4% of global capital investment on clean energy.

A significant wave of new investment is expected in LNG in the coming years as new liquefaction plants are built, primarily in the United States and Qatar. The concentration of projects looking to start operation in the second half of this decade could increase competition and raise costs for the limited number of specialised contractors in this area. For the moment, the prospect of ample gas supplies has not triggered a major reaction further down the value chain. The amount of new gas-fired power capacity being approved and coming online remains stable at around 50-60 GW per year.

Investment in coal has been rising steadily in recent years, and more than 50 GW of unabated coal-fired power generation was approved in 2023, the most since 2015, and almost all of this was in China.

Investment in low-emissions fuels is only 1.4% of the amount spent on fossil fuels (compared to about 0.5% a decade ago). There are some fast-growing areas. Investments in hydrogen electrolysers have risen to around USD 3 billion per year, although they remain constrained by uncertainty about demand and a lack of reliable offtakers. Investments in sustainable aviation fuels have reached USD 1 billion, while USD 800 million is going to direct air capture projects (a 140% increase from 2023). Some 20 commercial-scale carbon capture utilisation and storage (CCUS) projects in seven countries reached final investment decision (FID) in 2023; according to company announcements, another 110 capture facilities, transport and storage projects could do the same in 2024.

Energy investment decisions are primarily driven and financed by the private sector, but governments have essential direct and indirect roles in shaping capital flows

Sources of investment in the energy sector, average 2018-2023, sources of finance in the energy sector, average 2018-2023, households are emerging as important actors for consumer-facing clean energy investments, highlighting the importance of affordability and access to capital, change in energy investment volume by region and fuel category, 2016 versus 2023, market sentiment around sustainable finance is down from the high point in 2021, with lower levels of sustainable debt issuances and inflows into sustainable funds, sustainable debt issuances, 2020-2023, sustainable fund launches, 2020-2023, energy transitions are reshaping how energy investment decisions are made, and by whom.

This year’s World Energy Investment report contains new analysis on sources of investments and sources of finance, making a clear distinction between those making investment decisions (governments, often via state-owned enterprises (SOEs), private firms and households) and the institutions providing the capital (the public sector, commercial lenders, and development finance institutions) to finance these investments.

Overall, most investments in the energy sector are made by corporates, with firms accounting for the largest share of investments in both the fossil fuel and clean energy sectors. However, there are significant country-by-country variations: half of all energy investments in EMDE are made by governments or SOEs, compared with just 15% in advanced economies. Investments by state-owned enterprises come mainly from national oil companies, notably in the Middle East and Asia where they have risen substantially in recent years, and among some state-owned utilities. The financial sustainability, investment strategies and the ability for SOEs to attract private capital therefore become a central issue for secure and affordable transitions.

The share of total energy investments made or decided by private households (if not necessarily financed by them directly) has doubled from 9% in 2015 to 18% today, thanks to the combined growth in rooftop solar installations, investments in buildings efficiency and electric vehicle purchases. For the moment, these investments are mainly made by wealthier households – and well-designed policies are essential to making clean energy technologies more accessible to all . A comparison shows that households have contributed to more than 40% of the increase in investment in clean energy spending since 2016 – by far the largest share. It was particularly pronounced in advanced economies, where, because of strong policy support, households accounted for nearly 60% of the growth in energy investments.

Three quarters of global energy investments today are funded from private and commercial sources, and around 25% from public finance, and just 1% from national and international development finance institutions (DFIs).

Other financing options for energy transition have faced challenges and are focused on advanced economies. In 2023, sustainable debt issuances exceeded USD 1 trillion for the third consecutive year, but were still 25% below their 2021 peak, as rising coupon rates dampened issuers’ borrowing appetite. Market sentiment for sustainable finance is wavering, with flows to ESG funds decreasing in 2023, due to potential higher returns elsewhere and credibility concerns. Transition finance is emerging to mobilise capital for high-emitting sectors, but greater harmonisation and credible standards are required for these instruments to reach scale.

A secure and affordable transitioning away from fossil fuels requires a major rebalancing of investments

Investment change in 2023-2024, and additional average annual change in investment in the net zero scenario, 2023-2030, a doubling of investments to triple renewables capacity and a tripling of spending to double efficiency: a steep hill needs climbing to keep 1.5°c within reach, investments in renewables, grids and battery storage in the net zero emissions by 2050 scenario, historical versus 2030, investments in end-use sectors in the net zero emissions by 2050 scenario, historical versus 2030, meeting cop28 goals requires a doubling of clean energy investment by 2030 worldwide, and a quadrupling in emde outside china, investments in renewables, grids, batteries and end use in the net zero emissions by 2050 scenario, 2024 and 2030, mobilising additional, affordable financing is the key to a safer and more sustainable future, breakdown of dfi financing by instrument, currency, technology and region, average 2019-2022, much greater efforts are needed to get on track to meet energy & climate goals, including those agreed at cop28.

Today’s investment trends are not aligned with the levels necessary for the world to have a chance of limiting global warming to 1.5°C above pre-industrial levels and to achieve the interim goals agreed at COP28. The current momentum behind renewable power is impressive, and if the current spending trend continues, it would cover approximately two-thirds of the total investment needed to triple renewable capacity by 2030. But an extra USD 500 billion per year is required in the IEA’s Net Zero Emissions by 2050 Scenario (NZE Scenario) to fill the gap completely (including spending for grids and battery storage). This equates to a doubling of current annual spending on renewable power generation, grids, and storage in 2030, in order to triple renewable capacity.

The goal of doubling the pace of energy efficiency improvement requires an even greater additional effort. While investment in the electrification of transport is relatively strong and brings important efficiency gains, investment in other efficiency measures – notably building retrofits – is well below where it needs to be: efficiency investments in buildings fell in 2023 and are expected to decline further in 2024. A tripling in the current annual rate of spending on efficiency and electrification – to about USD 1.9 trillion in 2030 – is needed to double the rate of energy efficiency improvements.

Anticipated oil and gas investment in 2024 is broadly in line with the level of investment required in 2030 in the Stated Policies Scenario, a scenario which sees oil and natural gas demand levelling off before 2030. However, global spare oil production capacity is already close to 6 million barrels per day (excluding Iran and Russia) and there is a shift expected in the coming years towards a buyers’ market for LNG. Against this backdrop, the risk of over-investment would be strong if the world moves swiftly to meet the net zero pledges and climate goals in the Announced Pledges Scenario (APS) and the NZE Scenario.

The NZE Scenario sees a major rebalancing of investments in fuel supply, away from fossil fuels and towards low-emissions fuels, such as bioenergy and low-emissions hydrogen, as well as CCUS. Achieving net zero emissions globally by 2050 would mean annual investment in oil, gas, and coal falls by more than half, from just over USD 1 trillion in 2024 to below USD 450 billion per year in 2030, while spending on low-emissions fuels increases tenfold, to about USD 200 billion in 2030 from just under USD 20 billion today.

The required increase in clean energy investments in the NZE Scenario is particularly steep in many emerging and developing economies. The cost of capital remains one of the largest barriers to investment in clean energy projects and infrastructure in many EMDE, with financing costs at least twice as high as in advanced economies as well as China. Macroeconomic and country-specific factors are the major contributors to the high cost of capital for clean energy projects, but so, too, are risks specific to the energy sector. Alongside actions by national policy makers, enhanced support from DFIs can play a major role in lowering financing costs and bringing in much larger volumes of private capital.

Targeted concessional support is particularly important for the least-developed countries that will otherwise struggle to access adequate capital. Our analysis shows cumulative financing for energy projects by DFIs was USD 470 billion between 2013 and 2021, with China-based DFIs accounting for slightly over half of the total. There was a significant reduction in financing for fossil fuel projects over this period, largely because of reduced Chinese support. However, this was not accompanied by a surge in support for clean energy projects. DFI support was provided almost exclusively (more than 90%) as debt (not all concessional) with only about 3% reported as equity financing and about 6% as grants. This debt was provided in hard currency or in the currency of donors, with almost no local-currency financing being reported.

The lack of local-currency lending pushes up borrowing costs and in many cases is the primary reason behind the much higher cost of capital in EMDE compared to advanced economies. High hedging costs often make this financing unaffordable to many of the least-developed countries and raises questions of debt sustainability. More attention is needed from DFIs to focus interventions on project de-risking that can mobilise much higher multiples of private capital.

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