When will gas prices drop?

Imagine paying $160 to fill a 20-gallon tank with gas. That's what's some people in the United States are asked to pay, thanks to the spike in gas prices. How long will this last? For a long time, it seems. 

Gas prices in some parts of California are approaching $8 per gallon.

Highlights

By Marshall Connolly (Catholic Online)
3/14/2022 (3 years ago)

Published in U.S.

Keywords: gas prices, United States, inflation, war, cost, economy, drop, down

LOS ANGELES, CA (California Network) - Americans are reeling from high gas prices, which went up during the pandemic, and never quite went back down, even though the number of drivers fell thanks to lockdowns and shutdowns. Now, with war in Ukraine driving prices up on the world market, there appears to be no relief in sight. 

Although the United States imports very little Russian oil, other nations that do are facing serious disruption of their imports and must buy oil on the market, thus increasing competition with the United States for the already limited supplies available. This is driving the price of crude oil well above $100 per barrel. Futures for April are also over $100 per barrel, and are even higher for May, suggesting the experts have little confidence the supply situation will improve in the near term. 

The price increase combines with a series of macroeconomic factors, which are driving up prices at the pump. The federal government and central banks flooded the markets with cash during COVID, causing inflation to rise. The end of COVID lockdowns is releasing pent up demand for travel, goods, and services, which is also driving inflation higher. In some parts of California, where the highest prices in the lower 48 states is often found, prices are approaching $8 per gallon, which would cost the average traveler $120 to fill a 20 gallon tank. 

We live in a nation where most citizens cannot cover an emergency expense of $1,000, and often have much less cash than that. Given this, the high prices are soon going to force millions of Americans to cut back on other expenses. Dining out and travel are among the first impacted. 

The price of other goods will also skyrocket in the weeks ahead, as most goods must be shipped to market, thus increasing their cost. 

These pressures will drive workers to demand pay increases, which will in turn drive more price increases. 

Wall Street and oil companies can expect record profits, as well as those who make electric cars. However, most other firms will see declines. 

When will these prices drop? Generally high prices like these spur increased production, which will probably come on line over the spring and summer months. A drop in consumption will also help the problem. When fall arrives in the northern hemisphere, prices are likely to drop. During that season, people begin staying home and travel less. That means we should not expect relief at the pump until October or November.