Gas Prices Keep Dropping—But Don’t Pop the Champagne Just Yet

As Americans gear up for the Fourth of July weekend, there’s some welcome news at the pump. AAA reports that more than 72 million people will hit the road for the holiday, with 60 million driving. The silver lining? Gas prices have been sliding for weeks. The national average for regular unleaded now sits at $3.85 per gallon, down 13 cents from last week and a full 51 cents below last month’s peak of $4.36. Still, if that number stings, you’re not wrong—it’s a long way from the sub-$3 prices we saw back in February.

Where’s gas cheapest? You might guess Texas, but the answer is Indiana, where a gallon of regular averages just $3.18—a dime cheaper than the Lone Star State. And the most expensive? Not California, though it’s close. That dubious honor goes to Hawaii at $5.47 a gallon, with California trailing at $5.43. The good news is prices are falling steadily, but the bad news is we’re only now returning to the highest levels of 2023. So yes, it still feels expensive, because it is.

Will the trend continue? It depends largely on geopolitics. The conflict with Iran and the future of the Strait of Hormuz remain wild cards. CNN reports that U.S.-Iran talks have resumed, but both sides conducted strikes over the weekend, keeping oil markets on edge. For now, the price relief is real, but if it stalls, consumers may start shopping for more efficient cars—EVs, hybrids, and smaller models. The next few weeks will tell whether this is a brief reprieve or the start of a longer slide.