The Independence Day weekend is fast approaching, and pump prices continue to fall. AAA projects record travel this year with 72 million Americans including 877,000 Oregonians traveling for fun and fireworks. The fragile agreement between the U.S. and Iran has helped drive crude oil prices significantly lower, and that’s translating into falling pump prices. Even with the declines, Oregon gas prices are about 65 cents more per gallon than last year. For the week, the national average for regular gasoline falls eight cents to $3.85 a gallon. The Oregon average tumbles 15 cents to $4.68 a gallon.
AAA expects travel for Independence Day to set a new record. AAA projects 72.2 million Americans including 877,000 Oregonians will travel 50 miles or more from home over the 4th of July holiday period. But the increase is 0.5% which is smaller than recent year-over-year gains. The number of travelers driving and flying to their destinations is relatively flat compared to last year, while travel by other modes, including cruises, is the category seeing the biggest increase, up 5.3% compared to last year. Find all the details in the AAA Independence Day travel news release.
The recent agreement between the U.S. and Iran to end the war and reopen the Strait of Hormuz sent crude oil prices sharply lower earlier this month. But tensions in the Strait of Hormuz continue, with new skirmishes in recent days. This type of unrest has the potential to send crude oil prices higher again.
West Texas Intermediate, the U.S. benchmark for crude, was at $67 per barrel on Feb. 27, the day before the U.S. and Israel launched strikes against Iran.
“Drivers are spending less at the pumps than they were this spring, but are still paying about 65 cents more per gallon than last year. Pump prices have steadily decreased in the last several weeks. Even with the fragile peace agreement between the U.S. and Iran, it will take time for prices to return to prewar levels, as it could take weeks or months for shipping and production to return to prewar levels,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. “Any new surge in the conflict could send crude oil prices higher again.”
Even with the recent declines, U.S. pump prices are still the highest they’ve been during this time of year since 2022 after Russia’s invasion of Ukraine sent crude oil prices above $100 per barrel.
Gas prices remain significantly more than they were before the conflict with Iran began. The National average for regular gas was $2.98 and Oregon average was $3.92 on Feb. 28, the day the U.S. and Israel launched airstrikes against Iran.
Crude oil prices remain volatile, with dramatic swings driven by concerns of how the conflict with Iran impacts global oil supplies. Since the conflict with Iran started, prices for West Texas Intermediate, the U.S. benchmark for crude, have ranged between $71 and nearly $113 per barrel. Crude was at $67 per barrel on Feb. 27, the day before the conflict began.
In general, every $1 increase in the price of crude oil leads to a 2.4- to 2.5-cent increase in the price of gasoline.
For now, more ships are passing through the Strait of Hormuz, but current numbers are well below the 100 to 130 ships that passed through the waterway each day before the conflict began. Mines in the strait need to be removed and it will take time for oil production in the Middle East to rebound. Normally, about 20% of the world’s oil and refined products flow through the Strait of Hormuz, which is the narrow passageway of the Persian Gulf and is bordered by Iran. Tankers traveling through the Strait of Hormuz carry oil from major producers in the Middle East including Saudi Arabia, Kuwait, Bahrain, UAE, Qatar, Iraq and Iran. Any disruption in the straight can impact global oil supplies and send crude oil prices higher.