US gas prices have fallen for six weeks in a row, giving some relief to American drivers ahead of the Thanksgiving holiday. However, petrol prices are still higher than they were during previous Thanksgiving holidays, meaning drivers could end up paying a record amount for fuel during this year’s holiday travel season.
The average price of regular gasoline in the US stood at $4.01 per gallon on Monday, according to the American Automobile Association (AAA). This is around 10% lower than the recent peak of nearly $4.48 per gallon in late September, based on data from the US Energy Information Administration (EIA).
US gas prices fall for six weeks in a row
Wholesale gasoline prices have fallen even faster than the prices drivers pay at fuel stations. Gasoline futures dropped around 21% between September 18 and Friday’s market close.
Oil prices have also declined. US oil prices fell around 20% from their April peak, helping bring down the cost of gasoline.
Gas station prices have usually been around $1 per gallon higher than wholesale gasoline futures. Based on Friday’s closing prices, this suggests that average US gas prices could fall further to around $3.70 to $3.80 per gallon. This means American drivers could get another 20 to 30 cents of relief at the pump in the coming days, according to Yahoo Finance calculations.
Market analyst Mike Zaccardi also expects gasoline prices to fall below $4 per gallon soon. “That’ll be a 3-handle by mid-next week,” he wrote in a November 6 post on X. At the time, the national average price was $4.07 per gallon, according to Yahoo Finance.
Thanksgiving gas prices may hit a record high
However, even if gas prices fall below $4, Thanksgiving drivers could still face record fuel costs. The highest average gasoline price recorded during Thanksgiving week in EIA data going back to 1990 was $3.65 per gallon in 2022.
The latest weekly reading, covering the week of November 2, showed that average US gasoline prices were still at $4.15 per gallon. This is significantly higher than the previous Thanksgiving-week record of $3.65.
However, the comparison changes when inflation is taken into account. The highest gasoline price this year was $4.50 per gallon in May. After adjusting for inflation, that amount comes to around $4.53 in today’s dollars, according to Yahoo Finance calculations.
This is still much lower than the inflation-adjusted gasoline price of $5.71 in 2022 and $6.33 in 2008. This means that while drivers could face a record Thanksgiving-week average in actual dollar terms, gas prices are not at their highest levels when inflation is considered.
The recent fall in gasoline prices became faster during the week of the November 3 US midterm elections. During that week, average prices at fuel stations dropped by 12 cents per gallon, marking the biggest weekly decline since June.
However, ING economist James Smith does not expect the US midterm elections to make a major difference to gasoline prices. He said fuel costs were an important issue for American voters and politicians had openly discussed their importance, according to Yahoo Finance.
Smith also questioned whether the political changes after the elections would lead to any major improvement in the situation. He said that if diplomatic efforts had failed to find a solution before the elections, there was little reason to expect a sudden change now that the political cycle had reset for another two years.
High diesel prices add to US inflation fears
Diesel prices are still a major concern, even as gasoline prices fall. Diesel, which is widely used by trucks and trains to transport goods across the US, remains expensive. Diesel prices reached a record $6.53 per gallon during the week of September 21. They were still at $6.29 per gallon in the latest weekly reading, showing that transport fuel costs remain high.
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The supply of diesel is also under pressure. US diesel stockpiles fell below 100 million barrels in late October, reaching their lowest level since 2003, according to the EIA. High diesel prices are adding to the cost of transporting goods across the country. This can make it more expensive for businesses to move products and deliver supplies, potentially putting further pressure on prices paid by consumers, according to Yahoo Finance.
The impact of higher fuel costs is also becoming visible across American businesses. Companies are increasingly worried about inflation and the possibility that rising expenses could affect their profits.
S&P 500 companies mentioned the words “inflation” or “inflationary” 820 times during their October earnings calls. This was the highest number of mentions since February 2024, Bloomberg reported.
Higher costs of fuel, fertiliser and plastic resin are among the factors adding to companies’ expenses. These rising costs could make it harder for businesses to control their spending and protect their profit margins.
Chris Versace of TheStreet Pro said the key question is how long it will take for fuel supplies to return to normal levels. He said the time needed to rebuild supplies would help determine how quickly inflation pressures ease and companies get some relief in their profit margins.
US gas prices outlook: More relief expected
Investors and consumers are now waiting for fresh inflation and fuel supply data. The EIA’s next weekly fuel price reading is scheduled for Monday evening, November 9.
The US Consumer Price Index (CPI) data for October is expected on Tuesday, November 10. The CPI measures changes in the prices of goods and services and is closely watched to understand the direction of inflation in the country, according to Yahoo Finance.
Another important update will come on November 23, when the EIA releases its Thanksgiving-week gasoline price reading. This will provide a clearer picture of how much drivers are paying for fuel during the holiday travel period.
ING economist James Smith believes there could still be room for gasoline prices to fall further. He said fuel supplies coming from the Middle East have remained strong for several weeks, according to Yahoo Finance.
Smith added that if the war in the region does not become more serious, the risk premium included in oil and gasoline prices could fall further. A risk premium is the extra amount added to prices because of concerns about possible supply disruptions or geopolitical tensions, according to Yahoo Finance.
This could help bring down oil and gasoline prices further. However, the speed of the decline will depend on fuel supplies, developments in the Middle East and how quickly diesel stockpiles recover.
For now, US drivers are getting some relief from falling gasoline prices, but Thanksgiving travel could still be expensive. While petrol prices have declined for six straight weeks, the latest figures suggest that the holiday-week average could remain above previous records.