ARI SHAPIRO, HOST:
We've got some promising news to report from the gas pump of all places. Gasoline prices took a steep drop in recent weeks after hitting a record high earlier this summer. Gas still costs more now than it did this time last year, but the drop should take some pressure off inflation.
And NPR's Scott Horsley is here to explain. Hey, Scott.
SCOTT HORSLEY, BYLINE: Hi, Ari.
SHAPIRO: How much of a break are drivers getting?
HORSLEY: It's been a pretty big break. If you remember, back in June, the average price of gasoline nationwide hit a record high, just over $5 a gallon. Since then, it has dropped more than 85 cents a gallon, according to AAA. And some parts of the country, like Texas, have seen an even bigger decline. That's welcome news for drivers like Linda McDaniel, who has to commute 60 miles every day to her job in San Antonio.
LINDA MCDANIEL: I filled up yesterday, and it was 3.35. So yeah, I was excited about that. Because I have such a commute, I drive a Honda Civic, which gets pretty good gas mileage. But those bigger prices, I mean, it was really costing a significant amount more to fill up my tank.
SHAPIRO: What changed? Why'd the prices drop?
HORSLEY: Well, it's partly supply and demand. Drivers did cut back on driving when prices got so high. They combined errands. McDaniel actually canceled a road trip to Colorado this summer. So gasoline consumption in the U.S. is actually down about 9% from a year ago, which is a pretty remarkable cutback. At the same time, the supply of domestic crude oil is up more than 6% over the last year. So that's part of the story. We have also seen growing concern about an economic slowdown around the world, and that is weighing on global oil prices, which account for about half the cost of gasoline. Patrick De Haan, who's with the price-tracking website GasBuddy, says all of this is a recipe for falling prices at the pump.
PATRICK DE HAAN: Gasoline prices now nationally down for 48 straight days - 81,000 stations across the country selling gasoline at 3.99 or less. Americans collectively are going to spend $340 million less on gasoline today than they did on June 16, when prices peaked.
SHAPIRO: That's a significant difference. How is this likely to affect inflation, which hit another 40-year high in June?
HORSLEY: Well, it will certainly help some. Gasoline was the biggest driver of inflation between May and June. We'll get a look at July's cost of living next week, and hopefully the headline number will be lower than the month before. Other prices are still climbing, though, including some that tend to be stickier than gasoline, which often goes up and down. McDaniel, for example, rents a couple of storage units, and her rent has gone up by $100 a month. She's also worried about her electric bill because her air conditioner has been working overtime during the hot Texas summer. So the drop in gasoline prices certainly helps with the cost of living, but it is not a cure-all for high inflation.
MCDANIEL: Yes, it is welcome relief. But, I mean, you can definitely see in just about everything, like in our soda machine, the price went up 25 cents overnight. You know, it's just everything. Every little thing you notice just goes up. Even a pack of gum I noticed went up 20 cents.
HORSLEY: So far, we're not seeing much relief on grocery or housing prices, and those are a bigger part of the average family budget than gasoline.
SHAPIRO: Where do you expect gas prices to go from here?
HORSLEY: Well, De Haan, the GasBuddy analyst, predicts the average price could drop below $4 a gallon in the next week to 10 days. But there are some wild cards on the horizon. You know, if we get a hurricane in the Gulf of Mexico that knocks out drilling rigs or refineries, that could send prices climbing again and so could a new geopolitical threat like we saw with Russia's invasion of Ukraine.
SHAPIRO: NPR's Scott Horsley, thanks a lot.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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