Gas prices slip below $4 a gallon for first time since July

Gasoline prices in the U.S. are below $4 a gallon for the first time in nearly four months.

According to AAA, the national average for a gallon of gasoline was $3.98 on Tuesday, down from $4.56 a gallon earlier this year.

“We’re heading in the right direction in terms of what drivers want to see,” AAA spokesperson Aixa Diaz told CBS News. “They don’t want to be paying more than $4 a gallon at this time of year.

Patrick De Haan, a petroleum expert at tracking firm GasBuddy, predicts that fuel prices will continue to ease into the Thanksgiving holidays.

Diesel costs have also fallen, with the national average now running at $6.16 a gallon, down from $6.53 in late September.

Far from normal

Although lower gas prices offer relief to motorists, prices are still historically high for this time of year, AAA’s Diaz said. The record high for average U.S. prices at the pump around the Thanksgiving holiday was $3.58 a gallon in 2022, data from the motor club shows. 

“We’re still a ways away from even being close to normal for this time of year,” Diaz said.

The average price of regular gas has jumped $1 per gallon since the U.S. and Israel attacked Iran in late February. Consumer prices rose at a monthly rate of 0.5% in October, new government data shows.

October’s CPI data, released Tuesday, suggests high fuel costs may be spilling over into other categories, such as food, which rose at a monthly rate of 0.5% in October after remaining flat in September.

Why are prices down?

Gas prices have fallen in recent weeks as filling stations switch from summer-blend fuels to cheaper winter blends. Federal rules require gas stations to sell a summer blend, designed to guard against evaporation, from June 1 to Sept. 15. Outside that period, stations are allowed to use a winter blend, which is cheaper to produce, explaining why prices often fade in the fall.

The winter blend switch coincides with a drop in fuel demand, as people take fewer road trips and vacations later in the year. According to AAA, gas prices typically fall by around 10 to 30 cents per gallon during the winter months.

Global oil costs, the main factor affecting gas prices, have also dipped amid hopes that the midterm elections could open the door to a deal between the U.S. and Iran to end the war. 

“Some optimism about what could happen over in the Middle East and along the Strait of Hormuz certainly plays a role here,” Diaz said, while also acknowledging the impact of lower winter fuel costs.

On Tuesday, Brent crude, the international benchmark, was trading at around $91 per barrel.

In an interview with CBS News “60 Minutes” on Sunday, President Trump said he is “not looking” to escalate the war in Iran.

“I don’t think there’s any reason to,” he told “60 Minutes” correspondent Ross Douthat.

The timeline for reaching a resolution, however, remains unclear. Gregory Brew, senior analyst for Iran and energy for the political risk consultancy Eurasia Group, said Monday that the prospect for a deal remains “unlikely.” 

“Despite ongoing mediation, neither the U.S. nor Iran has shifted its negotiating position,” he said in a research note Monday.