Despite Global Crises, Gas Prices Slide as U.S. Election Nears

Fuel prices, which had soared after Russia’s invasion of Ukraine, have dropped to their lowest level since February.

Gasoline is approaching or has fallen below $3 a gallon in most states, returning to a national average not seen since February in one of the clearest examples of prices declining after a period of rapid inflation.

Prices at the pump averaged $3.16 for regular gas on Tuesday, down 11 percent from this time last year, according to the motor club AAA. Average prices have already dipped below $3 a gallon in 19 states, including the swing states of Georgia, North Carolina and Wisconsin.

That’s made filling up much more affordable than it typically is in the weeks before a presidential election.

Along with the cost of other staples like eggs and milk, the price of gasoline is frequently invoked by politicians and consumers alike as a barometer for the health of the economy and how Americans are faring financially. Gas prices have the added distinction of being prominently displayed almost everywhere, reminding drivers whether it’s more or less expensive to get to work or the grocery store.

Americans are currently spending around 2 percent of their disposable income on gasoline, less than they did in the run-up to all recent presidential elections besides the 2020 contest, according to ClearView Energy Partners, a research firm in Washington, D.C. Oil prices plunged that year as the world shut down because of the Covid-19 pandemic.

Vice President Kamala Harris has sought to capitalize on the economic good news, taking credit for the drop in gasoline prices. The Biden administration’s decisions to sell fuel from a national reserve and relax certain gasoline-making rules have helped to lower prices, the White House has said.

Former President Donald J. Trump has said he would reduce prices further, below $2 a gallon, part of a broader pledge to lower energy costs overall by at least half. He hasn’t explained how he would do so.

Many view his target as unrealistic. Prices at the pump last averaged less than $2 in June 2020, when oil demand dried up in the early months of the pandemic.

Two years later, after Russia invaded Ukraine, the cost of gasoline surged to $5 a gallon, and higher energy prices played an important role in accelerating consumer inflation worldwide.

While the president can influence fuel prices somewhat, costs depend mostly on market dynamics. Prices often decline in the fall, for example, as the days become shorter and temperatures cool, factors that discourage people from venturing out.

Oil prices have also slipped more than 15 percent in the past year to around $72 a barrel on Tuesday morning, as signs emerge that the world may soon have more crude than it needs. Oil production has been rising in the United States and elsewhere, while demand weakens in China, long a voracious consumer of fossil fuels.

The Organization of the Petroleum Exporting Countries and its allies have been trying to maintain prices by restraining output, with mixed results. The cartel has said it expects to begin opening the taps further in December.

Oil prices could rise again if fighting escalates in the Middle East and disrupts oil production or shipping routes.

For the time being, one of the biggest drivers of U.S. inflation over the past few years is helping the economy cool off. The price of diesel has fallen even further than that of gasoline, to $3.59 on Tuesday, compared with around $4.50 a year ago.

“Lower gas prices make everybody feel good,” said Jared Scheeler, chief executive of the Hub Convenience Stores, which operates several gas stations in North Dakota.

Americans are consuming less gasoline than they used to. Between better energy efficiency and more electric and hybrid vehicles on the road, domestic consumption is about 4 percent lower than it was in 2019, according to the U.S. Energy Information Administration. Many analysts doubt it will ever recover to prepandemic levels.

Gas stations are making up for reduced traffic by charging more for fuel. Average margins on a gallon of gasoline in the United States have expanded to around 39 cents, from 24 cents in 2019, outpacing inflation, according to the Oil Price Information Service.

“They’ve got some higher overhead costs, but most of it has been opportunity,” said Tom Kloza, global head of energy analysis at OPIS. “The market will bear it.”

Jeff Lenard, a vice president at the National Association of Convenience Stores, attributed the expansion of gasoline margins in part to higher costs, such as for labor and credit-card fees, and changing consumer behavior. Some drivers are choosing to fill up where they want to buy food, rather than where gas is a few cents cheaper, he said.

Larger convenience store chains are enjoying particularly strong pricing power. Alimentation Couche-Tard, a Canadian company that operates Circle K gas stations, earned a gross margin of 48 cents for each gallon of fuel it sold in the United States in the three months ending in late July, up from less than 27 cents per gallon during the same period in 2019, financial disclosures show. The company’s quarterly profit soared nearly 50 percent over that period.