Gasoline prices have provided much-needed relief to U.S. households in recent weeks as prices continue to plummet, with Georgia and Mississippi now seeing prices fall below $3 a gallon, according to AAA. The national average price has dropped about 35 cents a gallon from its peak in September, currently sitting at $3.52. This decline represents a more than 9% decrease in the past month alone.

States such as Texas, Louisiana, Alabama, and South Carolina are also experiencing average gas prices below $3.10 a gallon, adding to the relief for drivers across the nation. Meanwhile, California, which typically has the highest gas prices, has seen a significant decrease of 57 cents per gallon over the past month, bringing the average price close to $5.30.

The decline in gas prices can be attributed mainly to a substantial drop in the cost of crude oil, the essential commodity that is refined into gas. Severin Borenstein, a professor at the University of California, Berkeley, explains that the price of Brent crude oil has experienced a nearly 9% decrease over the past month. This decrease in crude oil costs typically takes a few weeks to fully impact the price of gasoline, indicating that the national average could drop an additional 15 cents by the end of 2023.

Diminished demand for gas has also played a role in driving down prices. With the end of the busy summer traveling season and the onset of an autumn slowdown, gas consumption has fallen below typical fall levels. Higher-than-usual gasoline prices and elevated inflation, which have impacted disposable income, are potential reasons for this decrease in demand, according to the U.S. Energy Information Administration (EIA).

The lowered demand and decreased profit margin between the cost of crude oil and the sale price of gasoline at the pump have contributed to further reductions in prices. Refiners are taking smaller profits as crude oil costs decline, resulting in lower gasoline prices for consumers.

Despite the positive outlook, some caution remains due to the volatility of the oil market, particularly amid the ongoing Israel-Hamas conflict. Economists and oil industry analysts have warned that an escalation of the conflict could lead to gas prices exceeding $5 a gallon. However, experts like Andrew Gross from AAA and Severin Borenstein remain optimistic, foreseeing continued relief and a decline in gas prices as the holiday season approaches.

As households gear up for the end-of-year gift season, Gross believes that prices will continue to decline, bringing more relief to consumers at the pump. With the continued drop in crude oil costs and reduced demand, Americans can expect to experience lower gas prices in the coming weeks and potentially throughout the holiday season.

Overall, the decline in gas prices comes as a welcome respite for U.S. households facing rising prices in various areas, offering them some relief in their budget as they navigate the challenges of a changing economic landscape.