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On Wednesday, the national average price for a gallon of regular gasoline stood at $4.108, as reported by AAA. This marks a slight decrease from the previous day’s average of $4.118.
In Washington, D.C., the decrease in gas prices comes amidst ongoing uncertainty surrounding ceasefire negotiations with Iran and issues related to trade in the Strait of Hormuz, which is currently affected by a military blockade.
Despite the minor drop, current gas prices are still considerably higher than earlier this year and significantly above the rates seen at the same time last year. A year ago, the average price of a gallon of gas in the U.S. was about 94 cents cheaper.
The recent reduction follows a ceasefire agreement with Iran after the Strait of Hormuz, a critical channel through which approximately 20% of the world’s crude oil is transported, was closed. The situation remains complex due to the U.S. military’s blockade of ships trying to navigate the strategic strait since Monday, despite the ceasefire.
The recent dip comes after a ceasefire agreement with Iran, following the closure of the Strait of Hormuz, where roughly 20% of the world’s crude oil travels through. But a blockade of ships entering or leaving the strategic strait launched by the U.S. military on Monday has further complicated trade since the ceasefire.
Gas prices remained elevated across the country, with every state averaging at least $3.442 per gallon. The highest prices continue to be on the West Coast, led by California at $5.878, followed by Hawaii at $5.651 and Washington at $5.391. California, Hawaii and Washington are the only states with average gas prices at more than $5 per gallon.
Meanwhile, the lowest prices were in the Great Plains and the South, including Oklahoma at $3.444, Kansas at $3.507 and North Dakota at $3.616.
Diesel prices also dropped by about 1 cent on Wednesday compared with Tuesday. The average cost of a gallon of diesel on Wednesday was $5.635, compared to $5.650 on Tuesday. Despite the decrease, diesel costs remain near record highs, continuing to put pressure on transportation and supply chains.
Why might prices differ from one gas station to the next?
Although the national average passed $4 a gallon, the price that drivers pay varies widely by state, city and station.
Taxes alone can create large gaps. California’s gas taxes and fees totaled about 71 cents per gallon last year, compared with roughly 9 cents in Alaska.
Distance from refineries, the type of retailer, the volume the location goes through, and whether there are other fuel options nearby also play a role.
Gas stations near competitors may choose to price gasoline competitively on large outdoor signs to attract drivers, hoping they’ll come inside and buy higher-margin items, said Neal Walters, a partner focused on energy at the global management consulting firm Kearney.
“It’s one of the only retail locations where you don’t have to go into the store to find out what you’re paying,” Walters said.
Why are gas and diesel prices elevated?
Prices began to rise sharply after the U.S. and Israeli attack on Iran on Feb. 28, which led to escalating tensions and military conflicts across the Middle East, where a large majority of global oil is sourced and distributed.
While not the sole factor for rising costs, volatile trade routes and other uncertainties in production have led to higher prices of crude oil, which is refined to make diesel, gasoline and jet fuel.
Crude oil has surpassed $100 per barrel several times in recent weeks, driving higher fuel costs. Rising diesel and jet fuel prices are also expected to increase transportation and air travel costs, potentially pushing up prices for goods across supply chains.
Highest average gas prices ever?
The record for the highest average price of a regular gallon of gas was set on June 14, 2022, with a national average of just over $5 during the early months of Russia’s invasion of Ukraine. The highest recorded average gallon of diesel, $5.816, came just five days later on June 19, 2022.
The Associated Press contributed to this report.