Gas Prices Are Down Year-Over-Year for First Time Since January 2021
U.S. gas prices hit a major milestone early Dec. 8, falling below the previous year’s average for the first time since January 2021 amid an ongoing slump in demand. Some experts say prices could plunge below $3 a gallon by Christmas — something that hasn’t happened in 20 months.
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The national average for a gallon of gas fell to $3.329 as of Dec. 8, according to AAA. That’s below the average of $3.343 a year ago, marking the first time that’s happened in 2022. Prices at the pump began to spike in February following Russia’s invasion of Ukraine. They continued to move higher until peaking at a national average of $5.016 a gallon on June 14, an all-time high.
Since then, prices have fallen by more than one-third and continue to move lower, despite recent efforts by OPEC and its allies to cut oil supplies as a way of pushing global fuel prices higher.
According to data from the U.S. Energy Information Administration, the last time gasoline prices were lower on a year-over-year basis was in January 2021. The average that month was $2.334 a gallon, down from $2.548 in January 2020.
The price of gas rose steadily between January 2021 and June 2022 before reversing course. Despite the swift decline in recent months, prices today are still the highest they’ve been in more than eight years.
Even so, the fact that gas prices have fallen so fast so quickly could bode well for the economy, experts say. As CNN reported, declining energy prices should help ease overall consumer inflation. The Consumer Price Index in October 2022 posted its lowest annual reading since January. The CPI numbers for November will be reported next week.
Meanwhile, oil prices continue to fall despite a few potential headwinds. One is the decision by OPEC+ this week to keep cutting supplies by 2 million barrels a day. Others are Europe’s embargo on oil shipped by sea from Russia and the West’s new price cap on Russian crude.
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As for gas prices: They really could dip under $3 a gallon by Christmas, Axios reported. If that happens, it would be a “huge gift to unwrap for motorists after a dizzying year at the pump,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a statement.
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