Are Gas Prices Going Down?

The average gas price in the U.S. as of May 15 is $3.535 per gallon, according to AAA.
Anna Helhoski
By Anna Helhoski  
Updated
Edited by Rick VanderKnyff  

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• Updated May 15, 2023 to reflect the most recent average fuel prices in the United States.

The average regular gas price in the U.S. as of May 15 is $3.535 per gallon, according to AAA, which tracks gas prices

AAA. National Average Gas Prices. Accessed May 15, 2023.
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It's cheaper than some of the prices we saw in 2022 and just barely below last Monday's average price of $3.537 per gallon. After falling for much of the second half of 2022, prices this year have ticked up incrementally, though they have fallen in recent weeks.

Compared with peak gas prices, the current average represents a roughly 29% decline since June 2022, when the average was $5.006 per gallon, according to data from the U.S. Energy Information Administration, or EIA

U.S. Energy Information Administration. Gasoline and Diesel Fuel Update. Accessed May 15, 2023.
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When you look further back and compare current costs with prices at the same time last year — early May 2022 — a gallon of gas is about 94 cents cheaper than it was then, AAA data shows.

» MORE: 5 gas apps to get you through the price surge

Why are gas prices down from their 2022 peak?

Spot shortages can drive up gas prices locally because of refinery or pipeline shutdowns, blending issues or even gouging. But big, nationwide swings in the price of gasoline are almost always due to the price of crude oil.

The cost of raw crude oil typically represents more than half of the cost of a gallon of gasoline, according to data from the U.S. Energy Information Administration (EIA). Refining, distribution and taxes account for the remainder.

The price of benchmark West Texas Intermediate crude oil has fallen from more than $115 a barrel in summer 2022 to about $70.04 today, according to the EIA

U.S. Energy Information Administration. Today in Energy. Accessed May 15, 2023.
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. That's a roughly 39% decline. Gasoline prices have declined around 29% from their peak at $5.006 per gallon.

Over time, the price of crude oil and the price of gasoline move with supply and demand. Many factors affect both. Recession, pandemic and higher prices tend to tamp down demand; war, collaboration among oil states and tax incentives can limit supply.

Gas prices at the pump rarely reflect that day’s market conditions; instead they represent costs incurred weeks, even months before. That lag makes prices slower to rise and slower to fall than news headlines might suggest.

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Where is the highest gas price in the U.S.?

Drivers in the states below are seeing the highest average gas prices per gallon, according to AAA data on May 15

AAA. State Gas Price Averages. Accessed May 15, 2023.
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  • California: $4.798

  • Hawaii: $4.764

  • Arizona: $4.670

  • Washington: $4.588

  • Nevada: $4.214

» MORE: Easy ways to save money on gas

Californians tend to consistently see the highest prices for gas. That’s because of several unique factors in the state including:

  • High gas tax: $0.539, according to IGEN, a tax software company.

  • More expensive fuel mixture required to meet state emissions standards.

  • Declining investment in in-state refining, spurred by a state-mandated phaseout of gasoline-powered vehicles and high carbon cap-and-trade fees.

Where are gas prices the lowest?

Drivers in the following states are seeing the lowest average gas prices per gallon as of May 15, according to AAA data:

  • Mississippi: $2.968

  • Louisiana: $3.065

  • Alabama: $3.077

  • Texas: $3.090

  • Arkansas: $3.104

» MORE: Best gas credit cards

How do gas prices work?

The price of gas is determined by a complex set of factors that are at work long before the gas gets to your local station.

Gas prices tend to correlate with consumer sentiment about the overall economy — as gas prices go up, confidence levels with the economic conditions of the country go down, according to research by the Mercatus Center at George Mason University in Virginia

Mercatus Center at George Mason University. Gas Prices, Inflation Expectations, and Consumer Sentiment. Accessed May 15, 2023.
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Here’s what you need to know about how gas prices work

U.S. Energy Information Administration. Gasoline Explained. Accessed May 15, 2023.
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There are four types of fuel available at the pump that will differ in price. The three non-diesel types of gasoline — regular, midgrade and premium — are categorized by octane rating, a measure of fuel stability (the pressure at which a fuel will combust in an engine).

  • Regular: The least expensive.

  • Midgrade or super: More expensive than regular but cheaper than premium and diesel.

  • Premium or super premium: Most expensive non-diesel gasoline.

  • Diesel, also known as distillate fuel oil, is used in vehicles that have diesel engines, such as freight trucks and buses. It’s the most expensive type of fuel on the retail market.

The cost of gasoline at your local station depends on multiple costs and profits including

U.S. Energy Information Administration. Gasoline Explained: Factors Affecting Gasoline Prices. Accessed May 15, 2023.
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Most of the gasoline sold in the U.S. is refined here. But to produce gasoline, crude oil must be refined, and the crude oil used to produce gas in the U.S. is a mix of imported and domestic. The primary sources of imported crude oil in the U.S. are from Canada, Mexico, Saudi Arabia and Colombia. Russia was on that list until March 2022, before the war in Ukraine.

Because the U.S. can source some of its own oil, we tend to see lower costs at the pump than, say, European countries where the majority of crude oil is imported. But because the crude oil used to produce gasoline in the U.S. is not entirely sourced from the U.S., conditions of global production and trade can affect the cost of fuel sold at your local gas station.

Crude oil must be refined to produce fuel that can be sold to consumers. This conversion is done in petroleum refineries. The cost of refining changes throughout the year and varies by region. That cost also depends on the type of crude oil used; the ingredients blended into the fuel; the formulation that must be used in each region to meet air quality standards; and the processing technology used at each refinery.

The retail price of gas is also determined by federal, state and local taxes. The federal tax on gasoline is 18 cents per gallon of gasoline and 24 cents per gallon of diesel.

States also have tax rates. Total state taxes and fees on gas in 2022 averaged 31.02 cents per gallon, according to the U.S. Energy Information Administration, or EIA. The states with the highest tax rates on fuel, according to IGEN, are:

  • Pennsylvania: $0.576.

  • California: $0.539.

  • Washington: $0.494.

  • New Jersey: $0.421.

  • Illinois: $0.392.

Multiple states took gas tax holidays in 2022 to provide some relief to drivers.

The cost and profits of getting fuel to consumers also affect the price of gas. Once crude oil is refined and becomes gasoline, it is shipped via pipeline to terminals where it can be blended to meet local standards. From terminals, it is delivered via tanker truck to retail gas stations where you buy your fuel. The marketing and individual retailer costs — by chains or independent stations — will be further passed on to the consumer. Rent, traffic patterns, wages, equipment, insurance, local taxes and operational fees are also factors that will affect the price retailers will charge for gas.

» MORE: Why is diesel so expensive?

Does the president control gas prices?

The president doesn't set the gas prices you pay at the pump. When prices go up, don’t blame the president. Conversely, when prices go down, don’t thank the president.

The White House is often held responsible for gasoline prices, but the administration rarely has effective tools to move the needle one way or the other. Supply and demand for oil is the culprit.

» MORE: How to choose a gas credit card

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