U.S. Gasoline Prices Fall Below $4 a Gallon for First Time in Four Months

[Financial News]  

The average price of gasoline at U.S. gas stations fell below $4 a gallon on the 10th (local time), the first time in four months, since July.
CNBC reported, citing the American Automobile Association (AAA), that the national average price of gasoline stood at $3.9788 a gallon that day. It was down about $0.17 from a week earlier and nearly $0.39 from a month earlier. One gallon is about 3.78 liters. Converted to a per-liter price, gasoline averaged $1.05 (about 1,412 won).
The Consumer Price Index (CPI) for October, released that day by the U.S. Department of Labor, also showed that the rise in energy prices had slowed sharply.
October CPI figures show that the month-over-month increase in energy prices plunged from 5.2% in September to 0.7% last month. The increase in the gasoline price index dropped particularly sharply, from 9.1% to 1% over the same period.
Analysts say President Donald Trump’s signaling that he might negotiate with Iran to bring down oil prices ahead of the November midterm elections appears to have been effective.
Seasonal factors also appear to have played a part.
Bespoke Investment Group noted that gasoline prices tend to fall around this time of year.
Global crude oil prices, a key input for refined petroleum products, are also weak.
Benchmark Brent crude continued to weaken, at one point falling below $90 a barrel that day. U.S. oil prices are also likely to fall further.
Concerns about supply are also easing.
According to ING, oil exports from Gulf countries have recovered to 80–85% of prewar levels despite Iran’s blockade of the Strait of Hormuz.
In an analysis note, ING said, “Expectations of easing tensions in the Middle East are lowering the geopolitical risk premium, putting energy markets under downward pressure on prices,” and noted that “oil prices continue to fall as supplies from the Gulf region continue to recover.” ING also added that gasoline prices are falling in Europe as well.
Meanwhile, the U.S. Federal Reserve (Fed) does not yet appear to be at ease.
Governor Christopher J. Waller expressed concern that energy shocks may be having a more persistent impact on inflation than they did during the COVID-19 pandemic in 2020.
Waller said, “I’m glad energy prices have fallen over the past week or so, but prices are still quite high compared with the beginning of the year,” adding, “The ultimate effect on inflation will depend on what level prices remain at.”

[email protected] Song Kyung-jae Reporter