July 4 Gas Prices Hit Three-Year Low Ahead of Record Travel

As Americans prepare for the July 4 holiday, many drivers will find some relief at the gas pump. The national average price for a gallon of gasoline is projected to remain under $3.50, according to a recent report released on Tuesday. This is particularly significant as over 60 million Americans are anticipated to travel during the holiday period.

On Tuesday, the national average price for a gallon of regular gas stood at $3.50, according to AAA and GasBuddy. However, this price is expected to decrease to $3.49 per gallon by Thursday. This would mark the lowest Independence Day gas price since 2021, as reported by GasBuddy. The current price is just four cents below last year’s July 4 rate and significantly lower than the $4.79 per gallon drivers faced in 2022. The high prices in 2022 were largely attributed to the effects of Russia’s invasion of Ukraine earlier that year, which significantly impacted oil costs. AAA estimates that oil makes up approximately 54% of the price at the pump.

GasBuddy forecasts that 45% of Americans will be traveling during the July 4 weekend. AAA’s projections are even higher, estimating that 60 million Americans will drive more than 50 miles during the holiday week, marking the highest travel estimate AAA has made for this period. This surge in travel could signal a potential increase in gas demand, according to AAA spokesperson Andrew Gross.

Despite the current lower prices, the Energy Information Administration (EIA) reported a decline in gas demand from 9.39 million to 8.97 million barrels per day for the week ending June 21, a decrease of approximately 240,000 barrels compared to the previous year. While AAA attributes the lower demand to the recent cooling of gas prices, there is concern that prices might rise again. This could happen if gasoline demand increases over the summer and if oil prices continue their upward trend. The West Texas Intermediate crude oil price recently surged to $82.95, reaching a three-month high, while Brent Crude spiked to $86.37 per gallon, its highest level since early May.

Despite the recent stability in gas prices, with a six-month high of $3.60 in April and a subsequent drop to $3.50 in early June before falling further to $3.40 a week later, analysts are predicting a potential increase in prices in the near future. GasBuddy petroleum analyst Patrick De Haan has warned that a busy hurricane season could drive prices up, particularly if storms disrupt refinery operations. Refineries, which convert crude oil into gasoline, are crucial to the supply chain. Notably, the Gulf of Mexico is a key region for both crude oil production and petroleum refining, accounting for roughly 15% of U.S. crude oil production and 47% of U.S. refining capacity, according to the EIA.

In terms of regional price differences, gas prices are currently lowest in the South and Great Plains. Mississippi leads with the lowest average price at $2.96 per gallon, followed by Louisiana at $3.03, Arkansas at $3.06, Oklahoma at $3.08, and both Texas and Tennessee at $3.10. Conversely, gas prices are highest in California, where the average is a staggering $4.79 per gallon. This high price is attributed to state taxes, transportation costs, and the switch to a more expensive summer fuel blend. Following California, the highest prices are found in Hawaii at $4.70, Washington at $4.31, Oregon at $4.05, Nevada at $4.04, Alaska at $3.90, and Illinois at $3.83.