Motorists in line for gas will pay less at the pump this Labor Day thanks to a continued decline in fuel costs even as the U.S. began to recover from its first major hurricane, according to AAA.
The national average cost for a gallon of gas dropped by one cent from last week to $3.82 in response to production constraints, according to the latest report from AAA.
The steady decline in prices could be due to a drop in demand for fuel this summer, which fell below previous years and stabilized oil prices, AAA said. And while a major storm like Hurricane Idalia can put pressure on gas prices, the storm’s path seemed to spare major Gulf Coast refineries. For now, the impact on prices has been neutral.
“With visits to the pump rather flat and the price of oil hovering around the $80 per barrel mark, the national average for a gallon of gas will likely stay where it is through this holiday weekend,” AAA spokesperson Andrew Gross said. “Hurricane Idalia may cause regional price jumps due to station damage, flooded roads, and power outages, but as in past years, these things are usually fixed in a few weeks.”
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Switching to winter gasoline brings more price relief
The good news is that motorists are in store for further price relief as refineries switch back to winter gasoline, according to GasBuddy head of petroleum analysis Patrick De Haan.
DeHaan said in a video that by mid-September, most areas of the country will be switching off that summer blend of gas and back to winter gasoline, and with it, there will be a nice decrease in prices.
“That decrease in prices is going to be bigger in some of the major cities like Chicago, St. Louis, Dallas, and much of the Northeast,” DeHaan said. “Those cities are going to see a big decrease because they have to use a more stringent type of summer gasoline.”
Summer-blend fuel is more expensive than winter-blend fuel primarily because the production process takes longer. Additionally, the overall yield of gasoline per barrel of oil is lower. This can add as much as 15 cents per gallon to the cost of producing these higher-grade fuels.
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Americans are paying more for used cars
The average price paid for a used car in the second quarter of 2023 is still 46% above what consumers paid five years ago, according to a recent Edmunds report. Consumers spent an average of $29,472 on their used vehicles, down 4.6% from the previous quarter, but still provided little relief for buyers struggling with record-high prices.
Moreover, drivers looking for bargains in older cars with higher mileage may not find one, according to Edmunds. Used vehicles with 100,000 to 150,000 miles cost 40% more in the second quarter of 2023 than four years ago, while cars with 150,000 to 200,000 miles are priced 28% more.
“Flexibility is key for car shoppers navigating the used market,” Edmunds Consumer Insights Analyst Joseph Yoon said. “The market has changed dramatically in the last few years, and therefore your old shopping habits may no longer serve you like they used to. Being open to doing something different than before, such as reconsidering your selection of cars or even rethinking your budget priorities, might land you the deal you are searching for.”
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