Gasoline Prices Down for 8th Straight Week

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Gasoline prices fell for an eighth straight week, reaching their lowest level in nearly four months. As of July 6th, weekly prices were down 5 cents for regular and premium gasoline.

Key Takeaways

As of July 6th, the national average for regular gasoline is $3.78 per gallon and premium is $4.76.
A $2.34 geographic price gap exists between Hawaii's high of $5.39 and Indiana’s low of $3.05.
West Texas light crude oil dropped 3.1% weekly to its lowest level in over four months.

Currently, the national average for regular gasoline stands at $3.78 per gallon, with premium averaging $4.76. Though down from recent highs, these prices represent a jump since the start of the year, with regular gasoline up 34% and premium up 27%. Compared to one year ago, regular gasoline is 21% more expensive (up from $3.13), while premium has seen a 18% increase (up from $4.05).

Gas Prices by State

According to GasBuddy, regional price disparities have widened significantly, leaving a $2.34 gap between the nation’s highest and lowest averages. Hawaii currently holds the highest average for regular gas at $5.39, while Indiana offers the cheapest at $3.05. Despite every state in the nation averaging over $3.00 per gallon, a clear geographic divide has emerged.

The West Coast continues to lead the nation in fuel costs, with two states averaging over $5.00 (Hawaii and California). In the middle tier, there are now six states primarily across the West and Northeast falling into the $4.00 to $5.00 range. Conversely, there are now forty-two states below the $4.00 threshold, with these lowest averages concentrated mainly in the South and Midwest.

Behind the Price: Components and Inflation

To understand these surges, it is helpful to look at the "price at the pump" as a sum of its parts. The retail price of gas is made up of four main components: 1) cost of crude oil, 2) refining costs and profits 3) distribution and marketing costs and profits, and 4) taxes.

The volatility in these components, particularly crude oil, has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). In the following chart, we take a look at gasoline prices adjusted for inflation to show the "real" cost to consumers.

For an easier way to visualize these effects, this next chart overlays the nominal price with the inflation-adjusted "real" price for both regular and premium gasoline.

For additional perspective on how energy prices are factored into the CPI, see Inside the Consumer Price Index.

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Crude Oil Market

This next chart shows the West Texas light crude oil price over the past 8 months. As of July 6th, WTIC end-of-day spot price for crude oil closed at $68.55, a 3.1% decline from the previous week and the lowest level in over four months.

The final chart provides a monthly overlay of West Texas light crude, Brent crude, and unleaded gasoline end-of-day spot prices, showing the tight correlation between global benchmarks and domestic retail costs.