The national average price for a gallon of gasoline dropped below $4 on Thursday for the first time since March, in an ongoing sign that inflationary pressures for consumers are easing.
The price for a gallon of regular gas stood at $3.99 on Thursday, according to AAA. That's more than a dollar below the record $5.02 consumers paid in June, unadjusted for inflation.
Part of the recent decline is thanks to high prices keeping consumers off the road and therefore curbing demand. Additionally, oil prices have dropped sharply, and the government has released barrels from the Strategic Petroleum Reserve, bringing more supply on the market. Some states have also temporarily suspended their gas taxes in an effort to partially shield residents from rising prices.
Still, the national average is 81 cents per gallon above last year's levels in what's become a pain point for the Biden administration ahead of the upcoming midterm elections.
Higher energy costs have been a major driver of inflation, which is running around the hottest level in more than 40 years. The latest consumer price index report, however, showed pressures easing a bit, in large part because of declining energy prices.
During July, energy prices dropped 4.6% compared with June's levels, the Bureau of Labor Statistics said Wednesday. Gasoline prices fell 7.7%.
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But some said consumers shouldn't celebrate just yet. Bob Yawger, director of energy futures at Mizuho, believes the recovery could be brief due to a number of catalysts that could push prices higher in the coming months.
For one, refining capacity in the U.S. remains extremely tight. Should a storm knock one of the Gulf Coast refiners offline, for example, prices at the pump could move higher once again. The release of barrels from the Strategic Petroleum Reserve will also end this fall, while a rebound in economic activity in China could boost demand for petroleum products.
The biggest wild card, however, is the price of oil, which accounts for more than half of what consumers pay at the pump.
West Texas Intermediate crude futures, the U.S. oil benchmark, are now trading around where they stood in February – before Russia invaded Ukraine. The contract advanced 0.7% to $92.55 per barrel on Thursday.
WTI traded above $130 in March. In recent weeks, recession fears – and a possible slowdown in demand – have sent prices tumbling.
"I think it's going to be fleeting," John Kilduff, partner at Again Capital, said of the declines at the pump. He noted that gasoline futures, which are a proxy for gas prices, are roughly 30 cents per gallon above their recent low.
— CNBC's Patti Domm contributed reporting.