Gas prices are falling dramatically, thanks to an unlikely source: The government shutdown. (Image Source: Flickr: Kansas Poetry (Patrick))
The shutdown of the United States federal government enters its second week, a somewhat critical phase due to the overall lack of progress in talks between the White House. The damage has no doubt been severe, with hundreds of thousands of people out of work at least temporarily, hundreds of millions of dollars going down the drain, and everyone blaming everyone else but themselves. However, there is one bit of a silver lining going for Americans in the midst of the government shutdown: Gas prices are at a real low right now.
According to AAA, the average price of gasoline nationwide is $3.35 per gallon, while the Lundberg Survey says it is $3.38 per gallon. The AAA numbers indicate a drop of about a nickel per gallon in the last week and 21 cents per gallon in the last month. The circumstances for the drop are, for the most part, seasonal: With the end of the summer season, an oversupply of fuel has allowed prices to drop, ahead of the winter.
However, the drop in prices is far more telling when looking at year-over-year data. According to AAA, the average price of gasoline today is some 46 cents lower than the same day last year. For this, the only explanation to the huge drop is the government shutdown. Without the government on active duty, energy demands have fallen in relation to the hundreds of thousands of federal workers not commuting to and from work, as well as the lack of orders and contracts for fuel.
The cheapest gas can be found in the St. Louis area, at about $2.97 per gallon on average. San Francisco, being San Francisco, has the most expensive gas in the continental United States at about a dollar more, or $3.96 per gallon.*
With the winter season coming soon, prices are expected to drop even further due to the lack of car travel over the course of the season. If the government shutdown continues, prices are expected to plunge even more so, perhaps to levels seen before the Great Recession began. However, it comes at a cost: While gas prices will serve as a great boon to car drivers, it can also be a sign of a very weak economy.
*(Due to being separate from the mainland, Hawaii and Alaska have higher gas prices by default).