As Chicagoans head to the pump this week before heading out for the long July 4 holiday weekend, they can feel better knowing they are paying less for a gallon of gasoline than a year ago.
Much less.
Averaging $3.65 in the metro area, gas prices in Chicago are about 45 cents a gallon lower than this time last year, and well below the $5-plus-per-gallon prices of 2022, says Patrick De Haan, Head of Petroleum Analysis at Gas Buddy, which provides real-time gas prices for consumers.
This is the third straight year of declining gas prices, and it’s the lowest cost of gas over the July 4 holiday since 2021, he said.
He attributed the yearslong price decline to a “rebalancing” after prices peaked in 2022, following disruptions such as COVID-19 and Russia’s war in Ukraine. He also pointed to increased gas production by OPEC this year, and the Federal Reserve raising interest rates, which has cooled off the economy and lowered gas consumption.
“That has slowed global oil consumption, and that’s allowed things to finally rebalance. And that’s why now, for the third straight year this year, we’re expecting the yearly national average [price of gas] to decline,” De Haan said.
Gas prices have decreased despite turmoil in the Middle East, namely the U.S. bombing key nuclear sites in Iran last month.
De Haan said Iran’s impact on the world market for petroleum isn’t significant enough to cause a spike in oil prices here. And Iran kept pumping out crude oil despite getting hit by the U.S.
“The fact is that very few countries consume and buy Iranian crude oil,” De Haan said. “That’s why the market kind of dismissed the potential of a disruption in the flow of oil because Iran really needs to continue selling oil to fund its budget.”
De Haan said during the summer months, gas prices usually drop as the supply of gasoline builds up. Also, if there are no major disruptions, like from a hurricane in the Gulf Coast area to impact refining, then gas prices may continue to decline, he said.
“If it’s a normal year, gas prices tend to ease through the summer as supply of gasoline builds up, just as it did again in government reports [Wednesday], highlighting gasoline inventories jumped over 4 million barrels in the last week,” De Haan said. “That’s a good sign for consumers.”
David Holt, president of Houston-based Consumer Energy Alliance, said motorists should be especially happy this Fourth of July.
“Everyone’s going to be getting in a car, going to a cookout or going to see friends. We’re saving a little bit of money because we haven’t seen gas prices this low in the summertime in over four years. So that’s great news,” Holt said.
He said the low prices can be partly attributed to the United States being the No. 1 oil producer in the world.
“Traditionally, if there’s been a supply disruption or conflict in the Middle East or elsewhere in an oil-producing nation, we’ve seen oil prices really shoot up,” Holt said. “But because the United States is now producing so much [oil] and we’re kind of relaxing the regulatory environment a little bit here ... we’re not seeing these big swings in prices right now.”
Gas consumers had mixed reactions to declining prices at the Devon Shell, 1500 W. Devon Ave., in Rogers Park on Wednesday.
Walker Brewer, 30, wasn’t quite sure how to feel about cheaper gas, but part of that reason is that he drives a motor scooter and spent less than $2 to fill up a tank.
“As a millennial, I remember when gas was far cheaper. And the fact that it’s so politicized makes me unhappy. Like, I don’t love the fact that the economy is tied to the Middle East,” Brewer said. “Or the fact that I should feel good about something not being impacted by the fact that there’s a war in the Middle East feels a little charged.”
Another consumer at the gas station, where fuel cost $3.79 per gallon, hadn’t yet noticed any dips in prices around the city but welcomed the news.
“Hopefully, that’d be great,” said Mac, 30, who declined to share her last name. “I don’t claim to know a whole lot about how it works, but, yeah, I mean who would be upset with it going down?”
While gasoline prices in Illinois are lower, they are still among the highest in the nation due to taxes, according to De Haan.
“Keep in mind, Illinois gas tax just went up again on July 1. That continues to leave Illinois as the second-most expensive state now for gasoline taxes, behind just that of California,” De Haan said. “Here in Illinois, we now have the second-highest gasoline taxes in the nation. Not a title you want to hear, although the good news for motorists that are traveling [out of state is] Chicago being on the doorstep of both Indiana and Wisconsin, where gas prices tend to be a bit lower.”
