Gasoline prices in the US before Labor Day weekend lower than last year

Just before Labor Day weekend, retail prices for all formulations of regular gasoline in the U.S. averaged $3.31/gallon on August 26, 2024, down 13% from a year ago, according to the U.S. Energy Information Administration (EIA). The drop in prices at the pump was due to weak global and U.S. demand for petroleum products, continued growth in non-OPEC+ crude oil production and a slowdown in China, the EIA said.

On June 2, 2024, OPEC+ members announced that most of their crude oil production cuts would be extended through 2025 to balance global oil supply and demand. Although crude oil and gasoline prices generally rose in the four weeks following the announcement, they have since fallen back to pre-announcement levels.

The cost of crude oil is a major driver of the price of gasoline. The EIA estimates that the price of crude oil contributed 55% to the price of gasoline in June 2024. The price of Brent crude oil decreased 4% compared to the same period last year and was at $81/barrel on August 26, 2024. The costs of refining crude oil, distributing and marketing gasoline, and taxes are the other components of the retail price of gasoline.

“Because crude oil, gasoline and other petroleum products are globally traded commodities, their prices are influenced by economic activity in major producing and consuming countries. Crude oil demand growth in China, the world's largest crude oil importer, was slower in 2024 compared to previous years due to an economic slowdown, putting downward pressure on prices,” the EIA said.

“Although the U.S. has seen lower demand for gasoline for most of this year compared to 2023, we expect U.S. demand to be higher over Labor Day weekend than last year. Still, there are currently more gasoline inventories in the U.S. than at the same time last year, at 221 million barrels, up 3%.”

Gasoline prices in the United States vary regionally, reflecting local supply and demand conditions, varying fuel specifications under state laws, and taxes. Regional gasoline prices are typically highest on the West Coast because of the region's limited connectivity to other major refining centers (including the Gulf Coast), tight local supply and demand conditions, and the need for gasoline specifications that are more expensive to produce. West Coast prices averaged $4.05/gallon on August 26, a decrease of $0.83/gallon (17%) from the same period last year and the largest decrease among the various regions.

In addition, varying weather conditions and unplanned refinery outages can lead to different price movements across regions. In July, prices rose slightly in the Midwest due to storm-related refinery outages. Oil production and refining on the Gulf Coast were threatened by Hurricane Debby, which made landfall in Florida on August 5 before weakening and moving up the East Coast. However, the storm did not have a significant impact on refinery activity or petroleum demand, according to the EIA.