Gasoline prices declined for the eighth consecutive day on May 29, according to fresh data from the American Automobile Association (AAA).
The national average for the price of regular gasoline fell by 3.5 cents from the previous day to $4.391 per gallon.
This is down more than 17 cents since the recent peak of $4.564.
California currently has the highest gas prices, averaging $6.06 per gallon. Consumers in Indiana are enjoying the lowest in the country at $3.77.
Wholesale gasoline prices—excluding taxes and retail costs—have also eased, falling almost 10 percent this week to around $3 a gallon on the New York Mercantile Exchange.
It has been a turbulent year for gasoline prices. Earlier this year, after reaching $2.75 a gallon, pump costs began edging higher in response to the severe winter storms in January and February.
But drivers really started feeling the pain when the war in Iran began in late February.
Motorists are feeling modest relief from ongoing peace negotiations with Iran. Optimism that Washington and Tehran could reach a peace deal has lowered global energy prices.
A barrel of West Texas Intermediate—the U.S. benchmark for oil prices—has declined nearly 11 percent this week to less than $87. Brent, the international benchmark, has also plunged 13 percent to $91 a barrel in overseas trading.
“But the fragile situation could cause oil prices to spike again if a ceasefire deal isn’t reached,” AAA said in a May 28 blog post.
Trump, in a May 29 Truth Social post, stated the Strait of Hormuz must be opened without tolls and free of mines. Additionally, Iran “must agree that they will never have a nuclear weapon.”
“I will be meeting now, in the Situation Room, to make a final determination,” the president said.
Despite optimism from the administration that energy prices could tank as soon as the conflict is resolved, market watchers worry about the secondary effects and strong seasonal demand.
Inventory Concerns
In recent weeks, industry experts have warned that global oil inventories could collapse to dangerously low levels.
“I mean really, really low levels,” he continued. “You can debate whether that’s going to hit those really low levels in two weeks or three weeks. Once you get to that point, then you’ll see the price shoot up.”
Chevron CEO Mike Wirth suggested oil prices will likely pick up again as crude inventories decline.
“We really are seeing markets tighten, inventories draw, demand for goods around the world still very strong,” Wirth said in an interview with Bloomberg Television on May 28.
He pointed to July and August as being “critical months” for physical stocks.
“It’s concerning,” Wirth stated.
Another worry is that the oil price shock will filter through the broader economy.
Economists often speak of the so-called rockets-and-feathers effect. This represents the asymmetrical price transmission between oil and gas: Gasoline will spike when oil surges, but will decline more slowly when crude plummets.
April’s annual inflation rate in the United States is nearing 4 percent. While core inflation, which strips out volatile energy and food prices, is tamer, market watchers worry that the longer crude prices remain high, the greater the persistent inflation threats will be this year.
“When the waterway that handles roughly 20 percent of the world’s oil supply goes dark, the ripple effects through—no, nearly all—supply chains, energy prices, and ultimately every household budget in America are not a short-term blip,” Mark Malek, CIO at Siebert Financial, said in a note emailed to The Epoch Times.
“Even if the deal is signed tomorrow, the consumer wallet doesn’t feel it tomorrow. Supply chains take time to replenish.”