Gas prices fall below $5 per gallon in the first weekly drop since April

A gallon of regular gas costs just under $5 in the U.S. — still much higher than a year ago, but it's also the first time in nine weeks that the weekly national average has fallen.

That average now stands at $4.98, according to AAA.

The drop doesn't signal a rapid descent to the low prices of 2021, but drivers could see modest decreases continue in the coming weeks, market experts say.

How low could gas prices fall?

Average prices could fall below $4.90 next week, said Patrick De Haan, an analyst at GasBuddy.

The biggest shift in the past week was that financial markets were digesting the Federal Reserve's move to raise its benchmark interest rate by 0.75 percent, a steep hike that amplified recession concerns. Crude oil prices fell sharply after that announcement — which also came as U.S. oil production hit its highest level in two years.

Consumer demand has fluctuated, with drivers juggling two competing feelings: the sting of record-high prices, and the urge to travel more than in the past two pandemic-cramped summers.

Summer road-trippers likely would welcome De Haan's recent prediction that "the national average could fall to $4.55-$4.75/gal in the weeks ahead unless trends shift."

Several powerful factors could alter the outlook

Oil production has been rising, but refineries are struggling to keep up with demand. In the U.S. the lack of refining capacity is seen as the biggest challenge to bringing prices down, and that isn't likely to change any time soon as the U.S. pushes to transition away from fossil fuels.

"My personal view is there will never be another refinery built in the United States," Chevron CEO Mike Wirth said last week.

Crude oil prices are expected to stay volatile, in part because Russia's invasion of Ukraine and retaliatory sanctions against Russia by Western nations, which have disrupted energy markets around the world.

The thirst for oil also remains unpredictable. AAA recently reported a slight drop in consumer demand. But as many stations lowered prices heading into the Juneteenth holiday weekend, GasBuddy's De Haan reported that U.S. gas demand surged more than 9% on Friday. [Copyright 2022 NPR]