Why Are Gas Prices Falling?

Source: Foundation for Economic Education
by Peter Jacobsen

“Anyone who has a car is breathing a sigh of relief this last week. After two years of increasing gas prices, we’ve finally had a significant fall in gas prices. Gas prices are still high at $4.33/gallon (nearly double the $2.18 they were in July of 2020), but there appears to be light at the end of the tunnel. Since the current administration has taken a great deal of heat over high fuel prices, perhaps it’s no surprise to see the White House taking credit for the lower prices. Earlier this month, President Biden noted that gasoline prices had fallen for 30 consecutive days. ‘Our actions are working, and prices are coming down,’ Biden said days later. However, there is little evidence to indicate the majority of the price drop is due to any particular policy change. This leaves us with an important question. Why exactly are prices falling?” (08/03/22)