Jan 5, 2024 - Economy

Gas prices are back down to $3 a gallon

Data: U.S. Energy Information Administration; Chart: Axios Visuals
Data: U.S. Energy Information Administration; Chart: Axios Visuals

U.S. gas prices have returned to the big round figure of around $3 a gallon.

Why it matters: Falling gasoline prices are typically a tonic for sour consumer sentiment.

The intrigue: It's a cornerstone finding of behavioral economics that changes in big round numbers for prices — also known as the "left-digit effect" — have a disproportionate impact on activity, suggesting they're more apt to catch peoples' attention and stick in their memories.

Average U.S. gas prices by state
Data: AAA. Map: Deena Zaidi/Axios Visuals

State of play: Average prices dipped below $3 last month, and are now hovering just a hair above it.

  • Before that, prices hadn't been below the milestone in more than two years, save for a couple of weeks around this time last year.

The bottom line: If gas prices manage to hop the line into the high $2-per-gallon zone and stay there, it could soften the recession-level grumpiness that consumers report feeling despite the strong economy and low unemployment.

Go deeper