The steady decline in fuel prices has been welcomed by millions preparing to travel for Christmas, offering a temporary break from the financial strains of recent months. According to the motor club AAA, the national average for unleaded petrol has remained below the $3 mark since early December, with prices hovering around $2.85 a gallon at the start of the week.
Fuel Costs Hit Four-Year Lows as Travel Surges
The latest data from AAA shows that December has been the cheapest month for drivers this year, with prices falling more than 18 cents compared with the same period in 2024. The association reports that unleaded petrol has dropped roughly 7% from a month ago and is more than 40% below the highs reached in mid-2022 when inflation surged in the wake of the pandemic. The result has been the most affordable December for petrol since 2020, when global lockdowns disrupted demand and crude oil prices plummeted.
According to AAA, the average price of West Texas Intermediate crude has stayed below $60 per barrel for most of December, helping to stabilise supply and keep pump prices low. The national figures, however, mask considerable regional differences. Drivers in Hawaii and California continue to pay among the highest rates, averaging $4.44 and $4.30 per gallon respectively, while motorists in Oklahoma enjoy the lowest, at around $2.30. Arkansas and Iowa follow closely, with prices near $2.42 per gallon.
The decline comes as a record number of Americans take to the roads for the holiday period. AAA forecasts that more than 122 million people will travel at least 50 miles between 20 December and 1 January, with nearly 110 million opting to drive. The combination of lower fuel costs and robust travel plans suggests that, despite economic headwinds, consumer mobility remains strong heading into the new year.
Inflationary Pressures Persist Despite Temporary Relief
While the fall in fuel prices offers short-term comfort, broader inflationary pressures continue to shape household budgets. Government figures indicate that consumer prices rose 2.7% in November compared with the previous year, still above the Federal Reserve’s 2% target. Many analysts have questioned the accuracy of the recent data, citing possible distortions caused by a 43-day federal shutdown that delayed key economic reports.
According to AAA and other economic surveys, Americans remain frustrated by the high cost of living. Many are still cutting back on discretionary spending during the holidays. A CNBC All-America Economic Survey found that more than 40% of respondents plan to spend less this festive season, a six-point increase from a year ago. Among those tightening their budgets, nearly half blamed the rising cost of everyday goods.
The temporary drop in petrol prices may help offset these concerns, at least for now. Yet as inflation persists and wages struggle to keep pace, the broader economic picture remains uncertain. For millions of drivers filling their tanks this December, the relief at the pump is a welcome, if fleeting, sign of stability amid a turbulent economy.
