US gas prices dip as oil drops below $100 a barrel

US gas prices dip as oil drops below $100 a barrel

Americans can expect a measure of relief for record high gas prices as oil recedes to less than $100 a barrel, analysts said.

The US crude benchmark fell 6% Tuesday to $96.84, down from nearly $130 a barrel last week — its highest level since 2008. Oil prices are falling as Russia and Ukraine leaders reportedly discuss a possible ceasefire, according to investment bank UBS.

“The move reflects easing fears of further supply disruptions based on ceasefire talks between Russia and Ukraine,” UBS analysts said in a report. “There were also indications that, while energy companies in Europe continue to avoid Russian oil, India has bought discounted Russian crude, potentially mitigating the hit to global supply from import bans in the US, UK and Canada.”

Gas prices are now declining slightly in a several US cities, and the drop should appear soon at more service stations around the US, according to Patrick De Haan, head of petroleum analysis at GasBuddy.

“It’s only time before we sink back under $4/gal average as long as these levels hold.” Hey tweeted.

That would mark a significant decline from the average of $4.32 a gallon Americans have been paying for the past two weeks, up 84 cents from only a month ago, according to GasBuddy. Some states, including Alaska and California, are paying average prices as much as $4.73 and $5.75 respectively, according to AAA. The higher prices have further strained the wallets of US families who are already grappling with rising inflation.

For the most part, oil prices are in lockstep with gas prices — as oil rises, so do prices at the pump.

“It bears reminding that the cost of oil accounts for about 50% of what drivers pay at the pump,” AAA spokesman Andrew Gross said in a statement Monday. “This war is roiling an already tight global oil market and making it hard to determine if we are near a peak for pump prices, or if they keep grinding higher. It all depends on the direction of oil prices.”

Gas prices fell to an average of $1.94 per gallon in April 2020 as the COVID-19 pandemic was taking hold. But fuel costs started rising sharply in the fall of that year as the US economy rebounded and demand surged. By December 2021, gas had jumped to $3.40, while the fiercest inflation in four decades pushed up the cost of everything from food to rent.

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This year, oil and gas costs continued to climb after Russia massed troops on the Ukraine border. Prices exploded higher after Russia launched a major invasion on February 24 amid concerns that the conflict could disrupt global crude supplies and trigger economic sanctions.

Prices rose further last week after the US announced a ban on Russian oil imports. Russia is a major exporter of crude oil, accounting for about 12% of the world’s supply. Any disruption to those exports is likely to drive gas prices higher for consumers almost everywhere.

Despite the pain at the pump, a recent CBS News poll found that 63% of Americans said they support the Biden administration’s sanctions on Russia, including the ban on Russian oil, even if it means gas prices must climb.