Barring sudden adjustments, the nationwide common worth of fuel appears prefer it may quickly drop under $3 per gallon for the primary time since Might 2021. It’s an arbitrary threshold but it surely feels vital. 2021 costs? That’s virtually pre-pandemic!
As costs fall, drivers are regaining some shopping for energy on the fuel pump. To point out how a lot, for instance you could have $20 to spend on gas, and also you’re paying the nationwide common for normal fuel (as of Oct. 28).
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On the present U.S. common worth of $3.13 per gallon, you may purchase about six gallons for $20, filling roughly half a tank. (Gasoline tanks usually maintain between 12 and 15 gallons of gas, in accordance with JD Energy.)
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Evaluate that to a 12 months in the past: Gasoline price $3.50 on common, which means you may purchase a bit greater than 5.5 gallons for $20.
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In June 2022, when the nationwide common peaked at $5.02 per gallon, $20 would get you simply 4 gallons — roughly a 3rd of a tank.
Gasoline costs differ extensively by state. Actually, 20 states already pay lower than $3 per gallon for normal fuel, whereas it’s nonetheless above $4 per gallon in three states. Right here’s what $20 will get you within the states the place fuel is priced highest and lowest:
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Highest: California. 4.35 gallons at a mean worth of $4.60.
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Lowest: Texas. 7.5 gallons at a mean worth of $2.67.
The desk under exhibits how far $20 goes the place you reside.
Is $3 per gallon low cost now?
After two years of excessive inflation, your response to $3 fuel (or your state’s equal) is perhaps difficult. Falling costs may convey aid to your funds. However you additionally may scoff on the hoopla over a worth that’s nonetheless a far cry from what you’d think about “low cost fuel.”
Possibly $2 per gallon is extra what you keep in mind as the edge for higher fuel costs. That was the nationwide common 20 years in the past, and we bought a current style of it when fuel costs plummeted within the early days of the pandemic in 2020. (It was a short-lived shock pushed by the sudden evaporation of gas demand.)
It’s true that in case you had been driving in 2004 and had the identical 20 bucks to spend on fuel, you may’ve purchased 4 extra gallons than now you can. However there’s a twist: In 2004, you didn’t have the identical $20. In any case, we’re speaking about inflation, which not solely impacts costs but additionally wages.
When evaluating costs over time, the underlying query is about affordability, says Jeremy Horpedahl, an economics professor on the College of Central Arkansas. To measure affordability, it’s extra useful to match the worth of a specific good to wages. “That tells you, can individuals purchase kind of of the nice than prior to now?”
Measuring the affordability of fuel
If you concentrate on spending on fuel by way of how lengthy it takes you to earn that $20 now in comparison with 20 years in the past, you is perhaps stunned at how inexpensive fuel truly is.
The common employee earned $30.33 per hour in September 2024, in accordance with U.S. Bureau of Labor Statistics information retrieved from the Federal Reserve Financial institution of St. Louis. The information tracks the typical hourly earnings of manufacturing and nonsupervisory workers within the non-public sector, and Horpedahl recommends utilizing it as a result of it’s a broad-based metric that excludes managerial wages that will skew the numbers larger. It’s additionally probably the most up-to-date.
For comparability, the typical hourly wage was $23.68 in September 2019, earlier than the COVID-19 pandemic. And the typical employee earned $15.78 per hour in September 2004, when fuel costs hovered round $2 per gallon.
Primarily based on September’s common hourly charge, it now takes about 40 minutes for the typical employee to earn $20. Spending that on fuel (on the present nationwide common worth) will get you a bit over six gallons of fuel. Shopping for the identical quantity of fuel took 41 minutes of labor in 2019 and 43 minutes in 2004.
So, for the second, and regardless of the curler coaster of the previous couple of years, it’s like fuel costs have hardly modified in any respect.
(Photograph by Joe Raedle/Getty Photographs)