One more thing to give thanks for: lower gas prices

Gasoline prices hovered at about $3 a gallon, on average, this Friday afternoon. That’s 7% less than at the same time last year and the lowest level since 2020, when the pandemic drove down prices, according to the federal Energy Information Administration.

When gas prices are down, look at what’s happening with crude oil, said Andrew Gross with AAA. “The cost of oil accounts for about 55 to 60% of what people pay at the pump,” he said.

West Texas Intermediate is trading under $70 a barrel, which Gross called fantastic.

“Anything under $80 is really ideal for keeping gasoline prices from surging higher,” he said.

Crude prices are relatively low and stable, despite conflict abroad, said Matthew Lewis, an economics professor at Clemson University. 

“There have been times in the recent months when it looked like we might have oil prices going up due to concerns, geopolitical concerns, but they didn’t last very long,” he said.

What’s helped smooth things out? “Global demand is sort of low enough that small supply concerns can be handled,” Lewis said. 

Refining capacity is also factoring into today’s gasoline prices, said Ed Hirs, an energy fellow and lecturer at the University of Houston. 

“We also have refineries pumping out a bunch more gasoline into the market than we did this time last year because we had more refineries operating. We had several offline domestically for [major repairs and renovations] and because of upsets last year,” he said.

That additional refining capacity has lowered prices. “It’s not that Grandma moved closer to you,” Hirs said.

There’s also some seasonality to gas prices. After Labor Day, they tend to slide.

“The days are getting shorter. Kids are back in school, and you make that switch from more expensive summer-blend gasoline to the less expensive, refined winter-blend gasoline,” said Gross at AAA.

That’s right. In the summer, we use a pricier gasoline that is better at preventing smog. But now?

“Because it’s colder out, we don’t have to worry about smog quite as much, so winter-blend gasolines require slightly less refining and they’re always cheaper,” Gross said.

And that pushes down the price at the pump.