Relief at the pump: Why are gas prices dropping?

Gas prices are falling nationwide, relieving Michigan drivers and signaling shifts in the global energy landscape. But what's driving this decline?

Prices at Michigan gas pumps have dropped by over a third from the record-high prices seen a couple of years ago. 

According to the American Automobile Association (AAA), which tracks gas prices, the current average price for unleaded gasoline in Michigan is $3.15 compared to $5.22 in May 2022.  

The price decrease is partly due to complicated geopolitical events. 

When Russia escalated its invasion of Ukraine in February 2022, the global energy market was thrown into chaos. The United States and the European Union took swift action to reduce their use of Russian energy products and imposed sanctions. Sanctions on Russian energy pushed Western countries to diversify energy sources, leading to temporary price spikes. 

In 2019, the United States began producing more energy than it consumed, with the percentage of exports increasing yearly. 

The most recent data from the U.S. Energy Information Administration (EIA) reports that in 2023, U.S. energy exports reached their highest level in history. 

Increasing renewable energy production is occurring at the same time as the increase in fossil fuel production; in addition to that, more efficient home appliances and electric vehicle (EV) production have propelled the U.S. and other Western countries into a more secure energy economy. 

The winter season is another reason we’re seeing a decrease in prices at the pump.

Not only do cross-country vacations decrease when cold weather approaches and kids return to school, but the blend of gasoline changes from a more expensive summer concoction to a less expensive winter one.

Seasonal changes in air temperature require a change in the properties of the gasoline we use. 

Winter gasoline needs to evaporate at lower temperatures for the engine to work properly, while summer gasoline needs to be inhibited from excessive evaporation during warm weather. Higher amounts of butane are added to winter gasoline to adjust its Reid Vapor Pressure (RVP), a measure of gasoline volatility at a given temperature, and since butane is a cheaper component than other gasoline products, the overall price for gasoline falls in cooler seasons. 

Something to keep in mind as you hit the roads this winter is that butane volatility contributes to air pollution and smog and provides less energy than other gasoline products. 

AAA recommends purchasing fuel-efficient or electric vehicles, using cruise control on the highway and avoiding rapid acceleration and braking.

The U.S. has affordable gas prices compared to much of the world. The U.S. ranks in the top quarter with the lowest gasoline prices out of a list of over 160 countries, with the bulk of less expensive gasoline occurring in Middle Eastern countries, which have an ample supply and negligible transport costs. 

As gas prices drop, drivers can enjoy some financial relief heading into the holiday season. However, achieving long-term energy stability will require ongoing efforts to diversify supply, invest in renewables, and adapt to a changing global market.