Gas prices are on a long slide heading into the Christmas and New Year holidays.
The national average pump price slid 12 cents since last week to $3.14. There are now 20 states with averages below $3 per gallon, according to AAA. The current average prices is 54 cents a gallon less than a month ago and 16 cents less than a year ago.
Oil prices sink
“The cost of oil, gasoline’s main ingredient, has been hovering in the low-to-mid $70s per barrel, and that’s $50 less than the peak last Spring,” said Andrew Gross, AAA spokesperson. “Combined with low seasonal demand, gas prices could slide a bit more before leveling off.”
According to data from the Energy Information Administration, gas demand decreased slightly from 8.36 to 8.26 million barrels per day last week, which coincides with the arrival of the winter driving season, when fewer people hit the roads due to shorter days and more lousy weather.
Meanwhile, total domestic gasoline stocks rose significantly by 4.5 million barrels to 223.6 million barrels.
Increasing supply and lower gasoline demand are pushing pump prices lower.
The lower prices also have prompted the Biden administration to begin buying oil on the open market to begin refilling of the National Strategic Petroleum Reserve.
Strategic fund helped blunt price rise
When the Russian invasion of Ukraine began sending oil and energy prices skyrocketing last, the Biden administration released 180 million barrels of oil from the Strategic Petroleum Reserve in an effort to stabilize the price of gasoline at the pump.
By doing so, the U.S. government, led by Energy Secretary Jennifer Granholm, appears to have made about $4 billion, as prices have fallen dramatically over the course of the year, according to estimates from the Wall Street Journal.
Selling when crude oil prices were high, the U.S. captured billions in value. By one widely used measure, the price of crude oil in Texas peaked at about $124 a barrel in March, and the average price during the SPR sales period was about $96; today that oil costs just $73 per barrel.
The administration’s decision to refill the Strategic Reserve came in for criticism from Rep. Lauren Boebert (R-Colorado), who claimed Biden was stocking up at higher prices.
But Patrick DeHaan, the top analyst at GasBuddy.com, who in the past has been critical of Biden for not doing enough to boost gasoline supply, pointed out in response that the Strategic Petroleum Reserve is now buying back oil at a significantly lower price than what it sold it for earlier this year.
“Average selling price $96 [at the time of the sales], including some sales close to $120, and the price today is $75,” DeHaan wrote to Boebert. “You’re not the best at math.”
He also noted that the Strategic Petroleum Reserve saw a net decline in barrels during Trump’s tenure, dropping from 695 million barrels in 2017 to 634 million by 2021.