Short Brief

Good news / Bad news

Gas prices could drop below $3 a gallon by Christmas.

What to know:

Filling up now is as cheap as it was in February, just before Russia’s invasion of Ukraine.

Why is this happening? (It’s not necessarily a good sign)

Demand for gas is falling as countries prepare for an economic downturn, among other factors.

What else?

The U.S. central bank may slow its interest rate hikes, starting this month, because of signs that inflation is slowing down.

The cost of gasoline is falling so fast that it is beginning to put real money back in the pockets of drivers, defying earlier projections and offering an unexpected gift for the holidays.

Filling up is now as cheap as it was in February, just before Russia’s invasion of Ukraine touched off a global energy crisis. AAA reported the average nationwide price of a gallon of regular Wednesday was $3.50, and gas price tracking company GasBuddy projected it could drop below $3 by Christmas. And all of that relief probably helped drive robust shopping over Thanksgiving weekend.

“People are realizing that they might be back to spending $50 to fill their tank instead of $80,” said Emma Rasiel, a professor of economics at Duke University. “It is the main signal consumers notice on inflation. It is the one thing they are likely to track, how much it has gone up or down, because every week they need to fill up their car.”

But Rasiel cautioned that less-expensive gas can also give consumers the wrong idea. Prices of other goods and services are much less volatile, and there is no indication that this moment of more-affordable fuel is pushing the cost of other things down.

Even as the plunge in prices at the pump helps fuel a national holiday shopping spree, it is a reflection of the financial strain consumers and businesses are confronting worldwide. Prices are going down because demand for oil and gas is falling as countries brace for recession, coronavirus outbreaks in China threaten major financial disruption and drivers cut back on gas-guzzling as they try to save money to cover skyrocketing mortgage payments and stock market losses.

Earlier worries that sanctions on Russian oil would create a shortage in supply and send prices soaring toward the end of the year have, for now at least, given way to ailing economies and jittery financial markets.

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