November 20, 2023
As Thanksgiving approaches, millions of Americans gearing up for the holiday season are enjoying a 10% reduction in the retail price of regular gasoline compared to the same period last year. On the Monday before Thanksgiving, the national average stood at $3.29 per gallon (gal), marking a significant decline that, when adjusted for inflation, translates to a 13% decrease.
This year’s lower gasoline prices come as a welcome relief for holiday travelers, with the American Automotive Association (AAA) predicting a 2% increase in the number of people embarking on journeys of 50 miles or more compared to 2022. The forecast puts the total at a substantial 55 million travelers.
Traditionally, U.S. retail gasoline prices exhibit a seasonal pattern, rising in late summer and tapering off as winter approaches. Factors contributing to this year’s decrease include reduced fall gasoline demand and an early shift to winter-blend gasoline in California. Regulatory measures allowing refiners to use cost-effective components in the fall have further contributed to this decline.
Despite OPEC+ members implementing crude oil production cuts over the past year, concerns about a global economic slowdown persist, leading to a continual drop in crude oil prices. The Brent crude oil price has fallen by 15%, reaching $82.32 per barrel (b) on November 20, the lowest since July. Crude oil prices remain a significant factor, constituting 55% of the total cost to produce a gallon of gasoline in the United States.
Regional disparities in gasoline prices persist, shaped by local supply and demand dynamics, state-specific fuel specifications, and taxes. The West Coast, facing limited refining connections, tight local conditions, and specific fuel requirements, saw prices averaging $4.42/gal, marking an 8% decrease from the previous year.
In the Rocky Mountain region, where logistical challenges parallel those of the West Coast, prices averaged $3.20/gal, reflecting a 12% reduction from 2022. Conversely, the Gulf Coast, with nearly half of U.S. refining capacity and surplus gasoline production, reported the lowest average retail gasoline price at $2.79/gal, down 8% from the previous year.
On the East Coast, the region with the highest gasoline demand, prices averaged $3.17/gal, marking an 11% decrease. In the Midwest, prices also dipped by 11% from the same period last year, settling at an average of $3.12/gal on the Monday preceding Thanksgiving.
As Americans prepare to gather for the Thanksgiving holiday, the dip in gasoline prices brings not only financial relief but also contributes to increased mobility and travel during this festive season.