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Why are gas prices falling?

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Posted at 5:30 PM, Jul 11, 2022
and last updated 2022-07-11 17:37:55-04

LEXINGTON, Ky. (LEX 18) — The next time you fill up the gas tank, you could pay less. That’s because the price at the pump continues to drop, especially in the southeastern United States.

New numbers from AAA show Kentucky has some of the least expensive gas in the country, with an average price of $4.37 a gallon. A gallon of gas is also 15 cents cheaper than it was last week, one of the biggest decreases in the country.

So what’s causing the dip? Economist Michael Clark says market changes are related to supply and demand.

“One of the things that could be going on, is as gas prices have gone up, people are finally starting to respond to those, by maybe adjusting their behavior a little bit,” said Clark, the director of UK’s Center for Business and Economic Research. “On the supply side, it could be we're starting to see a little more production. In terms of domestic production, that has been up a little bit. So you know, both of those types of things will tend to bring prices down.”

It's some temporary help for frustrated drivers, but Clark says pent up demand for travel and the war in Ukraine mean we likely won’t see long-term relief at the pump soon.

“The fundamentals that drove prices higher are really still there,” he explained.

AAA also credits falling gas prices with the price of oil, which is currently around $100 a barrel.

If you’re looking for some of the cheapest gas in central Kentucky or the state, click here.