US gas prices to fall below $3/gallon as election approaches By Reuters

By Shariq Khan

NEW YORK (Reuters) – American drivers should see gas prices drop below $3 a gallon for the first time in more than three years as soon as next month, shortly before they go to the polls in November’s presidential election. analysts said this week.

Lower gasoline prices, largely the result of weaker demand for the fuel and lower oil prices, are a relief to consumers who have struggled with record fuel costs that have fueled inflation. Lower prices could also help Vice President Kamala Harris and other Democrats fight off harsh criticism from Republicans over pain at the pump.

As of Wednesday, the national average price of regular gas was $3.25 a gallon, down 19 cents from a month ago and down 58 cents from a year ago, according to data from the National Motorists Association AAA.

The average should drop below $3 a gallon by the end of October, if not sooner, with the summer season winding down and retailers starting to sell cheaper winter fuel in the coming weeks, Patrick De Haan said , analyst at GasBuddy.com. In North Carolina, considered a swing state in the Nov. 5 presidential election, pump prices were already below $3 on Wednesday.

“Americans will certainly remember the price they see when they drive to the polls, so this is certainly good news for Harris in her campaign for president against Republican Donald Trump,” De Haan said.

Studies by the Wells Fargo Investment Institute, among others, show that US presidential approval ratings are inversely related to the price of gasoline. So falling prices should lift Democrats this election cycle, said John LaForge, head of real assets strategy at the investment advisory firm.

Presidents actually have little direct influence on gasoline prices, which move based on global supply and demand. Prices have fallen sharply this year as demand has been weaker than expected, particularly in the US and China. The global benchmark fell from above $90 a barrel in April to a near three-year low below $70 on Tuesday.

A wild card is Hurricane Francine, which passed through the US offshore oil zone on Wednesday, lifting oil prices by more than $2 a barrel on fears of extended production shutdowns.

In 2022, oil prices hit record highs of more than $5 a gallon, mainly due to supply shocks from Russia’s invasion of Ukraine, at a time when global fuel demand was rising due to the easing of COVID-era lockdowns.

Supply has been more robust this year, helping lower pump prices as refineries have run at high rates, said Brian Kessens, senior portfolio manager at investment firm Tortoise.

U.S. gasoline demand is expected to average 8.92 million barrels a day this year, about 20,000 barrels a day less than last year, the Energy Information Administration (EIA) said on Tuesday. US. Earlier, demand in 2024 was expected to be on par with last year.

However, this level represents 9% of global oil demand and makes the US the world’s largest fuel consumer. This gives the dollar per gallon figure additional visibility on any government’s dashboard.

HARRIS BOOST

Republicans have repeatedly blamed President Joe Biden’s policies for rising gas prices and inflation during his tenure, but De Haan said those attacks are losing ground because of the rapid decline in pump prices.

Consumer prices rose 2.5 percent in the 12 months through August, the slowest year-over-year increase since February 2021, Labor Department data showed on Wednesday. The data showed gasoline prices fell 10 percent from a year ago, the biggest annual drop since July 2023.

Gasoline prices, as measured by the Consumer Price Index, have not risen since April.

The effect of lower gas prices will be felt most significantly in swing states that will ultimately decide the election, said Tom Kloza, head of energy analysis at Oil Price International Service.

Among those states, North Carolina’s average fell to $2.983 a gallon Wednesday, while Wisconsin’s average was $3.043, data from the AAA motorists association showed.

Diesel prices, a less visible but arguably more important indicator of a country’s economic health, are also on a similar trajectory due to weak demand and higher supply, AAA spokesman Andrew Gross said.

Primarily a fuel used in the production and transportation of goods, higher diesel costs passed on to consumers can raise prices for everything from eggs to televisions.

The EIA on Tuesday cut its forecast for U.S. demand for distillate fuel, which includes diesel and , to 3.83 million barrels a day, about 1 percent below its previous forecast and down 2.3 percent from last year.

National average diesel prices fell to $3.56 a gallon through Sept. 9, down 32 cents from the start of the year and the lowest level since October 2021, according to EIA data.

“Whoever is the next president will certainly benefit from lower fuel prices and severe deflation,” Kloza said.