The nationwide average price of a gallon of gasoline this morning sits at $4.14, according to AAA. That includes a high of $5.79 in California and a low of $3.96 in both Connecticut and Colorado. That’s the first time a state average has dipped under $4 per gallon in weeks.
What’s driving the drop?
AAA explains, “crude prices faced more downward pressure this week after the International Energy Agency’s (IEA) 31 member countries, including Mexico, Japan, Germany, and Canada, announced plans to release 120 million barrels of crude oil from their emergency oil stockpiles.”
The White House last week announced plans to release 1 million gallons of oil per day from America’s strategic stockpile.
Tom Kloza, global petroleum analyst for the Oil Price Information Service, says that move hasn’t directly impacted prices yet – it takes about two weeks for a change in supply to show up in the price we pay at the pump. But speculators are beginning to price in the supply increase before it arrives. “The drop in crude oil prices is in anticipation of more barrels coming from the U.S. reserves,” Kloza says.
When oil prices rise, gas prices tend to rise immediately. When oil prices fall, gas prices can take weeks to decrease.
Congress began hearings with oil executives this week to investigate that phenomenon. Under heavy questioning, executives from Exxon Mobil, BP America, and other large oil producers noted that their companies don’t directly set gas prices. But all notably refused to commit to lowering investor dividends or ceasing stock buybacks until the oil price crisis passes.
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