What is the biggest challenge facing the Biden administration and the Democratic Party in the United States ahead of the midterm elections in November this year? I believe many people's answer to this is skyrocketing prices. And this week, Biden, who was tormented by high inflation during his tenure in office, finally received a lot of good news: not only did the year-on-year increase in the U.S. CPI in August fall, but gasoline prices in the United States also fell below the symbolic $4 mark!

 

The national average price of unleaded gasoline fell to $3.99 a gallon Wednesday afternoon, according to energy data and analytics provider OPIS.

 

It was the first time since March that the average U.S. gasoline price was below $4 a gallon. That provides drivers with a breather at a time when inflation remains near 40-year highs.

 

U.S. gasoline prices hit a record $5.02 a gallon in June, according to OPIS. The current price has fallen by more than 20% since then.

 

Soaring fuel prices have been a big factor in pushing headline inflation higher, economists said. However, as consumers have recently felt pinch, they have gradually begun to tend to reduce consumption.

 

The latest data released by the U.S. Energy Information Administration (EIA) showed that gasoline demand in the United States in the first week of August fell by 3% from the first week of July.

 

Edward Moya, senior market analyst at Oanda, said, "What we're starting to see now is that widespread inflation is really making consumers more unaffordable. Consumers are canceling planned long-distance trips because of this. And they We haven't fully returned to the office yet."

 

A July survey by the American Automobile Association (AAA) found that many people drive less because they have to pay higher gas prices. Analysts said weaker fuel demand contributed to the drop in gasoline prices.

 

Whether oil prices can continue to fall remains a challenge

 

The average gasoline price in more than half of U.S. states was below $4 a gallon as of Wednesday afternoon local time, according to OPIS data. The states with the lowest fuel costs are concentrated in the South, where there are more refineries and pipelines.

 

However, there are still many regions where oil prices remain high. Among them, the West Coast of the United States is undoubtedly particularly obvious, because there is a lack of oil and fuel infrastructure similar to the rest of the United States. Average gasoline prices in California are still as high as $5.40 a gallon, second only to Hawaii nationwide, according to OPIS, even though current prices are down 16% from their June highs.

 

"The gas price is still too high!" said Darryl Maddox from Los Angeles. "It's like telling me that the ceiling is 20 feet off the ground and it's down to 15 feet now, but I still can't reach it."

 

Maddox is a local healthcare worker. He said that he usually mainly drives to and from get off work, and to save fuel, he has minimized driving on weekends.

 

Gasoline prices in New York also remain high, currently averaging $4.40 a gallon. While it's down 13% from its June high, that's not helping quite a lot of drivers.

 

In fact, whether gasoline prices can continue to fall, there are still many doubts. The duration of the drop in oil prices depends in part on how much fuel refiners can produce. Some U.S. refiners have reported that they expect a possible slowdown in refining operations this fall.

 

Unforeseen geopolitical events and a potential hurricane in the Gulf of Mexico could lead to refinery shutdowns, exacerbating volatility in oil prices, said Amy Chronis, Deloitte U.S. oil, gas and chemicals director. She believes retail gasoline prices are unlikely to fall further given current market conditions.