Gas prices drop below $4 a gallon for first time since March 5

Drivers in America are less pain at the pump because of the fact that gas prices are steadily decreasing.

The national average for regular gasoline fell below $4 a gallon, for the first time since March 5, according to AAA data. On June 11, gasoline prices topped $5 per gallon on average.

The price of gas at the pump is still 80 cents higher than one year ago, despite the recent decline in prices.

The international benchmark Brent crude BZ F has given up all its gains since Russia invaded Ukraine on February 24 but is still up more than 20% on the year. The West Texas Intermediate crude oil CL F was the U.S. benchmark, which hovered around $93 on Thursday morning.

According to the U.S. Energy Information Administration EIA, the price of crude contributes roughly 55% to the price of retail gasoline. Another factor contributing to the drop is demand destruction - Americans are simply driving less, as AAA found by surveying rivers.

It's not clear how much demand destruction there has actually been. One market researcher, Rory Johnsson of Commodity Context, recently stated that the weak gasoline demand data is likely to be overstated due to distorted Pandemic-era data estimation issues.

The US gasoline demand probably isn't particularly strong at the moment and has likely been weakening counter-seasonally for more than a month, but it isn't shocking coming out of a fresh all-time high price spike and the extent of this slowdown is likely to be exacerbated by the commercial decisions of wholesale market participants, Johnston wrote in a recent note. The WPSR EIA's Weekly Petroleum Status Report estimates are widened more than usual errors, and the more accurate PSM Petroleum Supply Monthly estimates have distorted comparisons between current data and 2020 data.