From Crisis to Calm
Gas prices were the inflation villain of 2022, when the national average briefly hit $5.02 per gallon after Russia's invasion of Ukraine disrupted global energy markets. The pain was visceral — every fill-up was a $70-80 hit. Political fallout was swift and bipartisan.
Fast forward to today, and gas is one of inflation's rare good-news stories. The national average has settled in the $3.30-$3.50 range, roughly flat year-over-year and not dramatically above the $2.80-$3.10 range of 2019. Adjusted for inflation, gas is actually cheaper now than it was for most of the 2010s.
Why Gas Is Stable
Three factors are keeping gas prices contained. First, US domestic oil production hit record levels in 2024, exceeding 13 million barrels per day. Second, global demand growth has been tepid as China's economic recovery disappointed. Third, the EV transition — while still early — is starting to measurably reduce gasoline demand growth. OPEC's production cuts have prevented prices from falling further, but the supply picture is fundamentally healthy.
The volatility risk remains. A Middle East conflict escalation, a major hurricane hitting Gulf Coast refineries, or unexpected OPEC actions could spike prices quickly. But barring geopolitical shocks, the structural outlook for gas is one of the more stable categories in the inflation landscape.