Javad Fardardi experienced something Friday that Bay Area drivers haven’t felt at the gas pump in months.
“Peace of mind,” he said while filling up his Saab for well under $6 a gallon at Berkeley Gas & Smog in Berkeley.
After months of record highs, gas prices have shot downward to a statewide average of $6.15 a gallon on Friday. That’s a nearly 30-cent drop since the record in mid-June and savvy commuters can now snag gas in the mid-$5 range.
“It makes a difference,” said Fardardi, a psychology professor at Claremont Graduate University, who said lower gas prices have a real impact on his mental health. He paid $76 to fill up Friday, about $25 less than his last gas station visit. “You look at the [gas price] sign and you feel more secure.”
The sinking fuel costs are largely due to the plummeting price of oil – now below $100 a barrel – as concerns over a possible recession send jitters through the petroleum market, according to industry experts.
But drivers hoping for a return to early 2022 gas prices – before oil markets went haywire in the lead-up to Russia’s invasion of Ukraine – are going to have to wait a while longer. For California commuters, the era of paying $4.50 a gallon is far in the distance, said Patrick De Haan, head of petroleum analysis for GasBuddy, a company that crowdsources gas price data.
“I don’t think things will go back to normal until the global situation goes back to normal and Russia exits Ukraine,” De Haan said, adding that prices will likely remain elevated for the next six to 18 months largely depending on the possibility of an economic recession. Moving forward, gas prices are going to be “very lumpy and bumpy,” he said.
In the Bay Area, gas prices are slightly higher than the statewide average, with San Francisco leading the pack at $6.24 a gallon followed by San Mateo County, according to AAA. Santa Clara County is the cheapest at $6.12 a gallon.
It is also unclear how long the downward trend in gas prices will last. According to AAA, part of the falling fuel costs are due to a softened demand for gasoline as prices surged, but demand may pick up this month reversing the steady downward march of gas prices.
“Domestic gasoline demand dipped recently, which took some of the pressure off of pump prices,” Andrew Gross, a AAA spokesperson, said in a statement this week. “But July is typically the heaviest month for demand as more Americans hit the road, so this trend of easing prices could be short-lived.”
In California, the falling prices are also slightly offset by an increase in the gas excise tax. The July 1 tax bump hiked the price per gallon by roughly 3 cents.
Another issue with retail gasoline prices is that they have a history of rising quickly in tandem with oil prices and falling back slowly even when oil prices drop, a well-documented principle economists refer to as “up like a rocket, down like a feather.” That’s because the main thing forcing gas stations to lower their prices is competition with other fuel depots leaving a lag of often several weeks between oil prices and prices at the pump.
“People believe that stations make more money when prices go up when it’s exactly the opposite,” said De Haan of Gas Buddy. He explained that stations often play price catch-up as oil costs rise and sometimes lose money during periods of surging oil prices. But when prices drop stations “take their time” before dropping prices.
Prices at some stations have dropped quickly. At Berkeley Gas & Smog, one of the cheapest stations in the area, the price tag fell 15 cents from Thursday to Friday to a cash price of $5.59 for a gallon of regular, according to the station manager.
For Aldonia Porche, who put $30 into her Chrysler sedan’s tank, the sinking gas costs are a welcome relief. But saving a few dollars on a fill-up is not nearly enough to make a dent in her household budget.
“You’re too tired to spend time with your kids and grandkids because you’re worried about your bills,” said Porche, who commutes from Richmond to Berkeley. A few dollars saved this week at the pump? “It’s a Band-Aid on a bleed.”
Contributed by local news sources