Approaching the Labor Day holiday weekend, the retail price for all formulations of regular gasoline in the U.S. averaged $3.31 per gallon Aug. 26 – 13 percent lower than the same time last year. The decrease in prices paid at the pump is driven by weak growth in global and U.S. petroleum product demand, continued crude oil production growth from countries outside OPEC+, and China’s slowing economy. OPEC+ members announced June 2 that most of their crude oil production cuts will extend into 2025 to balance global oil supply with demand.
The cost of crude oil is a major driver of the price of gasoline. U.S. Energy Information Administration estimates the crude oil price contributed 55 percent to the price of gasoline as of June 2024. The Brent crude oil price decreased 4 percent from the same time last year. Costs for refining crude oil, distribution and marketing of gasoline, and taxes make up the other components of retail gasoline prices.
Although the U.S. has experienced less demand for gasoline for most of this year compared with 2023, EIA estimates that U.S. demand for Labor Day is greater than last year. Nonetheless, more gasoline is currently in U.S. inventories than this time last year at 221 million barrels, an increase of 3 percent.