US gas prices fall for six weeks, but Thanksgiving fuel costs may hit record despite recent decline

US gas prices have fallen for six weeks in a row, giving some relief to American drivers ahead of the Thanksgiving holiday. However, petrol prices are still higher than they were during previous Thanksgiving holidays, meaning drivers could end up paying a record amount for fuel during this year's holiday travel season.

US gas prices fall for six weeks, but drivers may face record fuel costs during Thanksgiving travel. (Pexel/Representative image) (Pexel)The average price of regular gasoline in the US stood at $4.01 per gallon on Monday, according to the American Automobile Association (AAA).

This is around 10% lower than the recent peak of nearly $4.48 per gallon in late September, based on data from the US Energy Information Administration (EIA). Wholesale gasoline prices have fallen even faster than the prices drivers pay at fuel stations.

Gasoline futures dropped around 21% between September 18 and Friday's market close. Oil prices have also declined. US oil prices fell around 20% from their April peak, helping bring down the cost of gasoline. Gas station prices have usually been around $1 per gallon higher than wholesale gasoline futures.

Based on Friday's closing prices, this suggests that average US gas prices could fall further to around $3.70 to $3.80 per gallon. This means American drivers could get another 20 to 30 cents of relief at the pump in the coming days, according to Yahoo Finance calculations.

Market analyst Mike Zaccardi also expects gasoline prices to fall below $4 per gallon soon. "That'll be a 3-handle by mid-next week," he wrote in a November 6 post on X. At the time, the national average price was $4.07 per gallon, according to Yahoo Finance.

However, even if gas prices fall below $4, Thanksgiving drivers could still face record fuel costs. The highest average gasoline price recorded during Thanksgiving week in EIA data going back to 1990 was $3.65 per gallon in 2022.

The latest weekly reading, covering the week of November 2, showed that average US gasoline prices were still at $4.15 per gallon. This is significantly higher than the previous Thanksgiving-week record of $3.65. However, the comparison changes when inflation is taken into account.

The highest gasoline price this year was $4.50 per gallon in May. After adjusting for inflation, that amount comes to around $4.53 in today's dollars, according to Yahoo Finance calculations. The recent fall in gasoline prices became faster during the week of the November 3 US midterm elections.

During that week, average prices at fuel stations dropped by 12 cents per gallon, marking the biggest weekly decline since June. However, ING economist James Smith does not expect the US midterm elections to make a major difference to gasoline prices.

He said fuel costs were an important issue for American voters and politicians had openly discussed their importance, according to Yahoo Finance. Smith also questioned whether the political changes after the elections would lead to any major improvement in the situation.

He said that if diplomatic efforts had failed to find a solution before the elections, there was little reason to expect a sudden change now that the political cycle had reset for another two years. Diesel prices are still a major concern, even as gasoline prices fall.

Diesel, which is widely used by trucks and trains to transport goods across the US, remains expensive. Diesel prices reached a record $6.53 per gallon during the week of September 21. They were still at $6.29 per gallon in the latest weekly reading, showing that transport fuel costs remain high.

The supply of diesel is also under pressure. US diesel stockpiles fell below 100 million barrels in late October, reaching their lowest level since 2003, according to the EIA. High diesel prices are adding to the cost of transporting goods across the country.

This can make it more expensive for businesses to move products and deliver supplies, potentially putting further pressure on prices paid by consumers, according to Yahoo Finance. The impact of higher fuel costs is also becoming visible across American businesses.

Companies are increasingly worried about inflation and the possibility that rising expenses could affect their profits. S&P 500 companies mentioned the words "inflation" or "inflationary" 820 times during their October earnings calls.

This was the highest number of mentions since February 2024, Bloomberg reported. Higher costs of fuel, fertiliser and plastic resin are among the factors adding to companies' expenses. These rising costs could make it harder for businesses to control their spending and protect their profit margins.

Chris Versace of TheStreet Pro said the key question is how long it will take for fuel supplies to return to normal levels. He said the time needed to rebuild supplies would help determine how quickly inflation pressures ease and companies get some relief in their profit margins.