(CNN) – Drivers in the United States have something to cheer about: a historic drop in gasoline prices.
Since the fuel hit a record $5.02 per gallon on June 14, 2022, the national average price of regular gasoline has fallen every day, according to the American Automobile Association (AAA).
This streak of 70 consecutive days of low gas prices is the second longest streak since 2005, Bespoke Investment Group said in a report titled “America’s Great Summer of Falling Gas Prices.”
The national average for a gallon of regular gasoline fell to $3.89 on Tuesday, down from $4.38 the previous month.
And while prices are up 73 cents from a year ago, the latest drop is significant. Especially if we take into account the inflationary alarms caused by the increase in the cost of gasoline above 5 US dollars just two months ago.
The longest streak since 2005 was the 117-day streak that ended in January 2015, according to Bespoke. Now, the report notes that the percentage drop in gasoline prices so far this month is the sharpest on record at this point in August.
Why do gasoline prices drop?
There are a number of factors behind lower gas prices this summer. And not all of them are positive.
First, the $5 cap is a turning point for many drivers, as some have chosen to use their cars less. This drop in demand helped balance the market.
At the same time, fears of a US recession and concerns about the Chinese economy sent oil prices down sharply. Which ended up dragging the fuel numbers down.
On the supply side, the unprecedented release of emergency oil into the national reserve ordered by the Biden administration helped ease the pressure on energy prices.
At its peak in mid-June, the national average for regular gasoline rose by a staggering 50% for the year. But with the summer down, prices are now up about 19% this year. That’s just one percentage point more than the average year-to-date change for each year since 2005, according to Bespoke.
“Who would have thought during the spring that by late summer we would only see an increase in gasoline prices by an average of a year?” On-Demand analysts wrote in the report.
However, this streak of low gasoline prices could end if oil costs continue to rise.
After falling to $86.53 a barrel, the lowest in nearly eight months, last week, US crude rose 3% on Tuesday. It rose again above $93, a sign that OPEC and its allies may take action.
Saudi Energy Minister told Bloomberg News that OPEC+ may have to cut production. He added that “extreme” volatility and illiquidity meant the futures market was increasingly “decoupled” from fundamentals.
The OPEC+ production cut would represent a major shift from the influential group of producers and could push oil prices higher.