It finally happened — the average price of regular unleaded gasoline in Virginia returned to what it cost a year ago, before an inflationary spiral that became a hot-button political issue in congressional mid-term elections this fall.
The average price of regular unleaded gas dropped to $3.21 a gallon on Wednesday in Virginia, the same as it cost a year earlier - a milestone in the ongoing effort to tame inflation.
For Richmond economist Kent Engelke, that saved him $40 in filling up his car with premium unleaded gasoline at Costco on Wednesday morning, compared with the summer peak.
"I said, 'Wow! I feel like I hit the jackpot,'" said Engelke, chief economic strategist and managing director at Capitol Securities Management, Inc.
The average price of regular unleaded gasoline has fallen by $1.65 a gallon in Virginia since peaking at an all-time high of $4.86 a gallon on June 14 at the beginning of the summer driving season. In the Richmond area, the average price was $3.20 a gallon, a penny more than a year earlier.
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The price has fallen by 12 cents a gallon in the past week and 27 cents a gallon in the last month, driven by falling crude oil prices despite efforts by OPEC+, an international oil cartel, to prop up prices by cutting production by 2 million barrels a day.
"We've actually seen some [gasoline] stocks and supplies go back up in the U.S.," AAA spokesman Morgan Dean said.
Nationally, the average price of regular unleaded gasoline dropped by 14 cents a gallon in the past week to settle at $3.35 a gallon on Wednesday, just one penny more per gallon than a year earlier.
The trend isn't as hopeful for diesel fuel, which cost an average of $5.14 cents per gallon in Virginia on Wednesday - 11 cents a gallon more than the national average. Diesel prices have dropped 14 cents a gallon in the past week in Virginia, but they remain $1.42 per gallon higher than a year earlier.
"It's all about refining," Engelke said at Capitol Securities, citing a decline in refining capacity because of tighter environmental regulations.
The higher cost of diesel fuel "transcends everything - from your electronic toy to bread," he said. "Diesel fuel is what is used to transport goods."
Lower energy costs are contributing to a decline in inflation, which was 7.7% higher in October than the previous year, but down from 9.1% in June, compared with the previous year. The Consumer Price Index for November will be released on Tuesday.
"I think inflation is going to back down to 4.5 to 5 percent, but I really don't see it coming down much less than that in the intermediate future," Engelke said.
