Gas Prices

The Biden administration, accepting the reality that consumers are not flocking to buy electric vehicles (EV), has backed away from its aggressive timeline to phase out gasoline-powered vehicles from America’s roads.

The administration has announced a new set of standards that allows carmakers more time to meet emission standards. Now, carmakers will be asked to produce a fleet of cars and trucks that will cut greenhouse emissions in half by 2032.

A year ago, the U.S. Environmental Protection Agency (EPA) issued a proposal that would have required automakers to make EVs account for 67% of their sales of light-duty vehicles and 46% of medium-duty sales by 2032.

What’s changed? Mostly pushback from the auto industry and its labor unions, a core Democratic Party constituency. They point out that EVs make up about 6% of U.S. vehicle sales and have recently plateaued.

Automakers were the first to respond, cutting back or delaying EV production. Ford is a prime example. 

After reporting that it was losing $1 billion a quarter on EV production, Ford announced it was postponing $12 billion in EV production. GM, meanwhile, scaled back its goal to build 400,000 EVs through the middle of this year. Volkswagen has ditched plans to build a $2 billion EV factory in Germany.

Used EV prices are falling

While EVs cost more than their gasoline-powered counterparts, even with government subsidies, they don’t cost as much as they once did – especially used EVs. A recent study by iSeeCars.com shows the average used car price is down 3.6% in the last 12 months but used EV prices have plunged 31.8%. Yet those falling prices have failed to create a surge in demand.

In a recent report, NPR attributed the slowdown in EV sales to a gap between early adopters, those enthusiastic about EVs, and the rest of consumers. The question is, how long will it take for that gap to disappear, if ever?

It didn’t happen soon enough for Hertz. In 2022, the rental car company announced it would spend $4.2 billion before the end of that year to purchase a fleet of Teslas. But it didn’t ask its customers first.

In January, Hertz said it would sell 20,000 EVs and replace them with gasoline-powered cars. Not long afterward, it fired its CEO.

Consumers dealing with sticky inflation for a number of everyday purchases are finding no relief at the gas pump. Fuel prices have risen sharply over the last four weeks.

According to AAA, the national average price of regular gas is $3.49 a gallon. That's about 10 cents higher than a week ago but the price is nearly 20 cents higher than a month ago. A 15 gallon fillup costs $3 more than it did in mid-February.

The only saving grace is the fact that regular gas costs about the same as it did a year ago. Even so, nearly everything else costs more.

“The national average price of gasoline has risen for the third straight week,” Patrick DeHaan, head of Petroleum Analysis at GasBuddy, wrote in a post on X. “We're about two cents above a year ago, and are likely to keep heading higher.”

DeHaan points out that the U.S. has entered the period when oil refineries begin making summer-grade fuel, which is more costly than the gasoline used during the winter months. At the same time, oil prices have been moving steadily higher.

Now that spring has arrived, motorists are driving a little more. The Energy Information Administration (EIA) reports gasoline demand is slowly rising. Meanwhile, total domestic gasoline stocks recently dropped by 5.6 million barrels to 234.1 million barrels, which is also putting pressure on prices.

Prices are rising fastest in Michigan. The statewide average price of regular gas there has increased by 10 cents in the last week and 40 cents a gallon over the last month.

Here are the states with the most expensive regular gasoline:

These are the states with the lowest prices for regular gasoline:

Inflation has fallen in recent months and one reason may be falling gasoline prices. But that might be about to change.

According to AAA, the national average price of regular gas is $3.15 a gallon, five cents higher than seven days ago. The average price is up six cents a gallon in the last month.

“We are in that time of year where pump prices begin to heat up, usually peaking around July,” said Andrew Gross, AAA’s spokesperson. “But unless something shocks the global oil market and causes prices to spike, the national average for a gallon of gas will probably stagger higher, with some flat days or even small price dips along the way.”

But something could be lurking that could cause prices to escalate faster than expected. Hostilities are increasing in the Middle East, and not just between Israel and Hamas. The conflict in Yemen is drawing in U.S. forces because of threats to shipping – primarily oil shipments.

Closer to home, there is a major outage at BP’s Whiting refinery, halting gasoline production. Patrick DeHaan, head of Petroleum Analysis at GasBuddy, says it is likely fuel production will stop for a couple of weeks, though he says that assessment could change with more information.. At the same time, he says gasoline demand is rising.

Where prices are rising the fastest

Prices are rising the most in the Southeast, which normally has the cheapest gas. Prices are already rising in the Midwest, a region that may feel the brunt of the refinery closure. Here are the states in the Southeast and Midwest that have seen the sharpest one-week increase in prices at the pump:

• West Virginia    + $.10

• Minnesota    + $.09

• Alabama    + $.08

• Virginia    + $.05

• Michigan    + $.04

Wyoming has the cheapest gas prices in the nation, with a statewide average price of regular at $2.68 a gallon. Oklahoma is second with an average price of $2.70.

California continues to have the highest gas prices in the nation. The statewide average for regular gas is $4.56 a gallon.

Drivers are receiving a nice gift just before the holidays. The price of gasoline has fallen to its lowest level this year after dropping every day for the last two months.

AAA’s national average price of regular gas is $3.24 a gallon, 26 cents cheaper than a month ago and 30 cents less than last year at this time. But that’s just the average. There are plenty of places where you can find cheaper fuel.

“GasBuddy now counts over 20,000 stations that are selling gasoline at $2.75 per gallon or less,” GasBuddy’s head of Petroleum Analysis, Patrick DeHaan, posted on X.

For example, the statewide average price of regular in Texas has fallen to $2.71 a gallon. The average price in Mississippi is $2.76 and $2.78 in Georgia. Eleven other states have average gas prices below $3 a gallon.

Gas remains expensive in a handful of states. California’s average price of regular is $4.88 a gallon, but a month ago it was $5.30 a gallon. The average price is $4.72 in Hawaii and $4.38 in Washington. Again, gas prices are much lower than they were a month ago.

Falling demand

One reason prices are falling is motorists are driving less. Data from the Energy Information Administration (EIA) show gas demand decreased from 9.49 to 8.95 million barrels a day recently.

Another reason for drivers’ good fortune is the decline in oil prices. World oil prices are near their lowest levels of the year, lowering costs for refiners, who have begun producing cheaper winter grades of gasoline.

But it’s not clear if oil prices will remain low for long. Goldman Sachs says it expects an extension of the unilateral production cuts by Saudi Arabia and Russia to last through the first quarter of next year and could even cut more deeply.