American drivers are getting some relief at the pump, with gas prices dropping for seven consecutive weeks after reaching record prices in June. But there's both good and bad news behind the decline in gas prices, experts say.
The average price for a gallon of gas dropped to $4.14 a gallon on Thursday, with prices falling 8 cents a gallon since Monday alone, according to AAA. The decline marks a significant retreat from the all-time record of $5.02 a gallon, which was reached on June 14.
Gas prices are dropping for a number of reasons, including an increase in gasoline production and a decrease in the cost of crude oil, which is the primary determinant for costs at the pump, according to Ellen Wald, senior fellow at the Atlantic Council.
But there's another reason for the drop, according to Wald, which could indicate broader economic issues: Americans are cutting back on driving as a way to cope with inflation.
"We have seen some of what we call 'demand destruction' — people choosing not to buy gasoline because it's so expensive," Wald told CBS News adding that "Fears we could be entering a global recession could be driving prices down."
The U.S. economy shrank in the second quarter, marking aof contracting GDP — often considered the hallmark of a recession. But that's not the entire picture taken into consideration by the National Bureau of Economic Research, the group that makes the official call on whether the U.S. has slipped into a recession. The NBER looks at a number of other economic indicators, including employment, which has remained strong this year.
Nevertheless, the GDP contraction has sparked a debate about whether the nation has entered a recession or is tipping toward one, with economists increasingly concerned about signs that consumers are cutting back on spending to cope with the.
Meanwhile, gasoline prices could continue to decline, at least in the near term, according to experts. The national average could dip to $3.99 a gallon within days, wrote Patrick De Haan, an analyst at Gas Buddy.
"[I]n ~100 hours, we will see the national average fall to $3.99 per gallon, the lowest and first time since March 5," De Haan wrote on Thursday. "A handful of stations in the US could even fall to $2.99/gal by then."
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