Gasoline prices in the United States are below $4 a gallon for the first time in nearly four months.
According to AAA, the national average for a gallon of gas was $3.98 Tuesday, up from $4.56 a gallon earlier this year.
Patrick De Haan, an oil expert with tracking company GasBuddy, predicts that fuel prices will continue to fall during the Thanksgiving holiday.
Diesel costs have also fallen, with the national average now standing at $6.16 per gallon, compared to $6.53 at the end of September.
Why are prices falling?
Gas prices have fallen in recent weeks as gas stations switch from summer blends to cheaper winter blends. Federal rules require gas stations to sell summer blend, designed to guard against evaporation, from June 1 to September 15. Outside of this period, stations are allowed to use a winter mix, which is cheaper to produce, which explains why prices often drop in the fall.
The shift to winter mixing coincides with a drop in demand as people take fewer road trips and vacations during the winter months. According to AAA, gas prices drop about 10 to 30 cents per gallon during the winter months for this reason.
Global oil prices, the main factor determining pump prices, also fell on hopes that the midterm elections could open the door to a deal between the United States and Iran to end the war. On Tuesday, Brent crude, the international benchmark, was trading around $91 per barrel.
In a interview with CBS News On “60 Minutes” Sunday, President Trump said he was “not looking” to escalate the war in Iran.
“I don’t think there’s any reason to do it,” he told “60 Minutes” correspondent Ross Douthat.
The timetable for reaching a resolution, however, remains unclear. Gregory Brew, senior analyst for Iran and energy at political risk consultancy Eurasia Group, said on Monday the prospect of a deal remained “unlikely.”
“Despite ongoing mediation, neither the United States nor Iran has changed its negotiating position,” he said in a research note Monday.
While gas prices have fallen, analysts say the high cost of fuel caused by the war has passed on to other categories, keeping inflation high. October CPI datapublished on Tuesday, shows that food prices increased at a monthly rate of 0.5% in October after remaining stable in September.
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