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One of the items in the consumer price index that has regularly fallen for almost two years is the price of fuel, particularly gasoline. Recently, the average price of a gallon of regular gas fell to under $2.10 in Oklahoma. For most of the nation, the decline has accelerated. With the price of oil dropping, that trend is not at an end point. During a period when “affordability” is an issue for American consumers, the price of gas is one of the few bright spots.
The current annual cost of gas for an average American household is $2,500. The topline number is that this is 3.2% of the average household expense. The U.S. median household income at almost $84,000 and the bite of taxes probably put that percentage higher. For households with income below the U.S. median, the figure approaches 6%.
Since consumer spending is 70% of U.S. gross domestic product, discretionary income is a large part of the health of America’s economy. When gas prices take less of a bite, it is worth paying attention.
GasBuddy recently reported that Christmas gas prices reached a four-year low: “GasBuddy expects the national average on Christmas Day to land near $2.79 per gallon, below last year’s price of $3.00, saving motorists over half a billion dollars during the Christmas week compared to last year.” Its experts stated the obvious by saying people in several states could save more money when filling up.
Most states with the lowest gas prices share two characteristics: they are near supply and refineries on the Gulf of Mexico, and they have low gas taxes. Today, gas prices are at or below $2.40 in Oklahoma, Texas, Arkansas, Mississippi, Iowa, Tennessee, and Colorado.
While taxes and oil refinery activity contribute much to the final price of gas, oil remains at the center of pump prices. Benchmark WTI crude is at $57 a barrel. In January, it was over $80.
While OPEC+ says it will cut production, it has not done so for several months. The United States keeps on pumping. Although no Russian oil is supposed to affect those figures, its shadow fleet of tankers delivers to several nations. China, India, and Turkey are among them.
American consumers need relief to household costs. Gas is among the few places they find some.