Saturday, May 18, 2024

Gas prices dive just in time for Thanksgiving road trips

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The average price for a gallon of gas in Southern California has dropped nearly 70 cents from a month ago, and holiday travelers can thank a volatile global oil market and seasonal shifts in production costs for lower prices heading into the Thanksgiving holiday.

Prices continue to drop, according to the Automobile Club of Southern California, but the decline has slowed in recent days.

The average price for a gallon of gas is $5.43 in California and $5.50 in the Los Angeles-Long Beach area. Although this continues a trend of declining gas prices, it’s still far above the average of $4.67 a gallon at this time a year ago, AAA said.

Last month, gas prices spiked to $6.15 a gallon in California thanks to several factors.

In early October, gas prices jumped after shutdowns at several California oil refineries that produce a specific grade of fuel for the state. Californians typically pay roughly 30 cents extra for a gallon of gas because of environmental fees, higher production costs and taxes.

On the global stage last month, major oil producers pledged to reduce crude oil production by 2 million barrels a day. And over the last week, gas demand increased while total domestic gasoline stocks decreased by nearly a million barrels, according to the U.S. Energy Information Administration.

Although all of those factors should point to higher costs at the pump, the overall costs have declined because the oil market has yielded more crude oil and less demand.

Earlier this month, the federal government announced the release of crude oil from the Strategic Petroleum Reserve, increasing the supply in the market.

On Friday, China’s health commission announced its strict COVID-19 policies, which delayed the reopening of its economy and in turn is expected to reduce the nation’s demand for oil, Reuters reports.

The cost of crude oil, the main ingredient in gasoline, has also stayed within a narrow price range of $85 of $92 a barrel for several weeks.

“Gas prices usually tend to go down this time of year,” Automobile Club of Southern California spokesperson Anlleyn Venegas said.

Prices drop because fewer people tend to hit the road when temperatures drop, Venegas said, and refineries have switched over to producing their cheaper winter blend meant for colder temperatures.

Still, AAA expects this Thanksgiving to be one of the busiest seasons for automobile travel in recent years. It’s still unclear whether that will drive demand and prices.

“Prices are going down, but we’ll have to wait and see if they stay down heading into Thanksgiving,” Venegas said.

Other parts of the country are enjoying lower prices than California, with stations in 13 states selling gas for less than $3 a gallon, according to AAA.

“More gas stations could follow, which may be a big help with road trip budgeting as Thanksgiving approaches,” AAA spokesperson Andrew Gross said in a written statement.

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