WASHINGTON — The average gas price in Arizona fell to $3.99 a gallon on Thursday, the first time in months it has been below $4 and a sharp drop from the record high of $5.388 hit a while ago. barely two months.
An economist called falling gasoline prices a “good thing for anyone who drives,” and said declines are expected to continue into the fall. But others said while lower petrol prices are good news, families are still strained in other parts of their budgets, with inflation at its highest level in decades.
“While this is good news in terms of gasoline below $4, at least for now, there are other family budgets, bigger family budgets, that are in a really tight spot,” he said. said Andrew Sugrue, the director. of economic policy at the Arizona Center for Economic Progress.
“What particularly concerns us is rising housing costs, which continue to rise regardless of energy prices,” he said.
According to the AAA Gas Price Survey, the average cost of a gallon in Arizona on Thursday was $3,992, with prices ranging from a high of $4,285 in Mohave County to a low of $3,696 in the Pima County.
Nationally, the average price was $3.829, with gasoline in Hawaii costing $5.30, compared to $3.325 in Arkansas.
While that’s a far cry from the $3,117 Arizonans were paying a year ago this week, it’s well below all-time highs of $5,388 in Arizona on June 17 and $5,016 nationally on June 14.
Economists said the surge was largely due to Russia’s invasion of Ukraine, which affected oil supplies and instilled uncertainty in markets, as well as the traditional summer bull run. gas prices as more and more people hit the road.
“We had the Russian invasion of Ukraine in March with really high oil prices,” said Danny Court, senior economist at Elliott D. Pollack & Co. in Phoenix. “Then there was a lot of volatility between March and June, where you saw another spike in oil prices in June, and that’s about where the peak in gasoline prices was.”
Court attributes the recent drop in oil prices to simple supply and demand. The Biden administration released a “record amount of oil” from the Strategic Petroleum Reserve, he said, combined with fewer people on the road and a slowdown in economic activity in China that is lowering the oil demand.
Ashley Langer, an associate professor of economics at the University of Arizona, agreed with the Court that the Ukraine-Russia conflict is one of the key drivers of oil price uncertainty.
“Gas prices are falling largely because they were high relative to concerns about what was happening in Eastern Europe,” Langer said. “Now they’re coming back to more of what we expect of them, without it.”
Langer said gas prices typically drop after Labor Day, with fewer people traveling. She said we can expect prices to come down further, but added that there was no guarantee for that kind of “long-term statement”.
“Generally, I would expect this (lower price) trend to be true,” Langer said. “Maybe even more so this year because there was something keeping gasoline prices particularly high in late spring and early summer.”
Soaring fuel prices were one of the main factors behind soaring inflation over the past year, when the consumer price index rose by 8.5% , one of the largest increases in decades. Gas prices rose 44% from July 2021 to July 2022, according to data from the Bureau of Labor Statistics.
Sugrue pointed to a February poll by State Innovation Exchange and TargetSmart in which 63% of Arizonans said they were “very concerned” about gas prices, and 18% “somewhat concerned.”
“Given how addicted Arizonans are to cars, gas prices have been a major concern for Arizonans for some time as they navigate this economy with high inflation and high energy costs right now. moment,” Sugrue said.
But he noted that energy prices aren’t the only thing that matters to consumers. Other, “more meaningful” aspects of family budgets are still on the rise for families who have been feeling the pinch since the onset of the COVID-19 pandemic.
“We have this economic shock which has been the COVID-19 pandemic, where a lot of people are out of work or not able to earn a living,” Sugrue said. “They’re facing more economic pressure today than they were in 2020.”
In addition to rising fuel prices, the BLS Consumer Price Index indicated that costs over the past year have risen 10.9% for food, 5.7% for housing and 5.1% for clothing, among other costs.
Court agreed with Langer that gas prices are likely to continue falling for the foreseeable future, especially given their initial level. While some of the factors driving prices down may already be “priced in” by the end of the summer, he said the element of uncertainty could accelerate these changes – or slow them down.
“There are so many other dynamics going on,” Court said. “We have one of the biggest nations, along with China, which kind of has lower economic activity. Oil prices are very vulnerable to economic activity. If China slows down, that’s a drop in oil demand and oil prices will go down, it’s a drop in gasoline prices.