Gas prices are projected to range between $3.10 and $3.15 per gallon nationwide this Fourth of July, according to GasBuddy, which monitors fuel costs.
That’s a significant drop from $3.49 per gallon during last year’s holiday and could mark the lowest Independence Day gas prices since at least 2021.
If the national average dips below $3.12 per gallon, it would be the cheapest July 4th gas price since 2020, when demand plummeted during the height of the Covid-19 pandemic, GasBuddy noted.
Lower gas prices are currently one of the brighter spots in an economy that’s been facing weaker consumer spending and ongoing uncertainty tied to global trade tensions.
Though last month’s conflict between Israel and Iran temporarily disrupted the downward trend in prices, the impact didn’t last.
Oil prices surged after military strikes by Israel and the U.S. on Iran sparked fears of a broader regional war that could choke off critical energy flows. Gasoline prices spiked, raising concerns that travel costs could soar over the holiday.
However, energy markets stabilized after Israel and Iran agreed to a ceasefire, easing fears of a major supply disruption through the Strait of Hormuz. U.S. crude oil prices fell sharply, settling at $65.11 per barrel on Monday—down from a high of $79 on June 22.
“The pendulum swung very rapidly,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
That’s welcome news for the millions of Americans planning to hit the road.
AAA estimates that a record 61.6 million people will travel by car this Fourth of July weekend—up 2.2%, or about 1.3 million more people, compared to last year.
Thanks to lower fuel prices, GasBuddy estimates Americans will spend roughly $500 million less on gas this holiday than they did a year ago.
On an inflation-adjusted basis, today’s gas prices are even more affordable.
The average American is earning more now than in 2020 or 2021, so fuel expenses are consuming a smaller share of income. In comparison, real gas prices averaged $3.68 per gallon in June 2021 and spiked to $5.43 in June 2022, according to the U.S. Energy Information Administration. That’s well above current prices, which hover around $3.15 to $3.20 per gallon.
Some states are seeing especially steep year-over-year price drops, including Ohio (56 cents lower), Florida (43 cents), Kentucky (42 cents), and Michigan (42 cents), according to AAA.
Of course, risks remain. Gas prices could rise again if fresh tensions erupt in the Middle East, domestic refinery issues occur, or hurricanes disrupt fuel supply chains.
Barring such disruptions, analysts believe the outlook for summer fuel prices remains positive.
With tensions between Israel and Iran calming, OPEC continuing to boost supply, and U.S. oil production near record highs, GasBuddy says it’s even possible that national gas prices could dip below $3 per gallon by Labor Day.
“There’s limited ability for gas prices to rise above last summer’s levels,” De Haan said. “All in all, it’s not a bad time to hit the road.”
