Gas Prices Are Going Down, Finally

Most forms of energy should cost less this fall, with one big exception.

picture of gas station with palm trees in the background
(Image credit: Getty Images)

After peaking early this summer at more than $5 per gallon, the national average price of regular unleaded has been on a prolonged drop. Last week, the national average slipped below $4, and sits at $3.92 per gallon today. Drivers paying those prices probably aren’t celebrating; gas still costs about 70 cents more per gallon now than it did a year ago. But cheaper is always better. And it’s likely that more price relief is on the way.

The unofficial end of the summer travel season, Labor Day weekend, is almost here. Soon, kids will return to school, and family road trips will taper off, easing demand for fuel. Also, refiners switch from costlier summer-blend gas formulations that are required to meet air pollution standards, to cheaper, winter-blend gas. Meanwhile, crude oil, the biggest factor in determining gas prices, is falling in price, too, as investors bet that an economic slowdown will mean less demand for oil in coming months. If all those trends continue, look for the national average price of gas to slip to $3.50 per gallon before the year ends.

Other types of energy are getting a bit cheaper, too: Namely, propane and heating oil. Both spiked earlier this year when crude oil shot up after Russia invaded Ukraine, and now, both are seeing pullbacks. Again, they’re still expensive compared with last year. However, they should both get a bit cheaper before cool weather arrives, giving consumers a chance to fill up storage tanks at friendlier prices.

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One part of their utility bills that figures to really sting a lot of consumers in coming months: Natural gas bills. Unlike crude oil and the fuels refined from oil, natural gas prices have been rising lately, due to strong demand both in the U.S. and in Europe, where buyers are scrambling to find replacements for gas that Russia is no longer delivering. Gas futures contracts traded on financial markets are roughly double their price from this time last year, and could go higher still once cold weather arrives. Since roughly half of American households heat their homes with gas, that means a lot of painfully high bills once furnaces start cranking up.

Jim Patterson
Managing Editor, The Kiplinger Letter

Jim joined Kiplinger in December 2010, covering energy and commodities markets, autos, environment and sports business for The Kiplinger Letter. He is now the managing editor of The Kiplinger Letter and The Kiplinger Tax Letter. He also frequently appears on radio and podcasts to discuss the outlook for gasoline prices and new car technologies. Prior to joining Kiplinger, he covered federal grant funding and congressional appropriations for Thompson Publishing Group, writing for a range of print and online publications. He holds a BA in history from the University of Rochester.