Could gas prices in Idaho indicate upcoming recession? Here’s what cheaper gas may mean
Gas prices are slowly but surely returning close to prices seen before Russia’s invasion of Ukraine, but Idahoans still feel more tricks than treats this Halloween at the pump.
As has been the trend for a while in Idaho, the Gem State is enjoying a slow decrease in gas prices. The state average as of Wednesday morning was $4.35 per gallon, according to AAA, seven cents less than a month ago, but still 64 cents higher than a year ago.
Meanwhile, Idaho is 59 cents above the national average of $3.76 per gallon.
Gas prices typically decrease nationwide as the country heads into winter, according to AAA Idaho spokesman Matthew Conde. But this year, it’s not for the usual or positive reasons, he said.
“In a typical year, the seasonal cold weather curbs demand, and the switch to cheaper-to-make winter-blend fuel results in a nice price drop,” Conde stated in a news release. “But this fall, the trend is tied to fears of a global recession and the unbearably high price of fill-ups. Uncertainty is playing havoc with the market.”
What is a recession, and what would it look like?
In conjunction with the COVID-19 pandemic, Russia’s war in Ukraine has resulted in central banks worldwide raising interest rates with synchronicity not seen since the global recession in the early 1970s, according to the World Bank, a United Nations agency that provides loans to member nations.
The World Bank does not expect the trajectory of interest rates to cut global inflation to a sufficient level to prevent a recession. The U.S. economy also shrank for a second straight quarter, according to The Associated Press, which is typically defined as a recession.
But Boise State economics professor Geoffrey Black also told the Idaho Statesman that while the U.S.’s inflation is rising, it’s still not as severe as in other countries. Along with Mexico, several European countries such as the United Kingdom, Italy and Germany all have higher inflation rates than the U.S.
Black also noted that the Federal Reserve increased interest rates in September, which helped the U.S. dollar gain strength against the British pound and the euro.
“When the dollar is strong, then it makes our goods more expensive overseas. And so that decreases exports, and then it makes foreign goods cheaper for us,” Black said in an interview.
“That’s actually kind of helping the Federal Reserve because it’s increasing interest rates with the idea of reducing consumption and investment spending domestically,” he continued. “But then also, with the international trade, that’s also helping because it’s also putting downward pressure on the demand side by decreasing exports and increasing imports.”
According to the economics resource website Economics Help, there are two types of inflation: demand-pull, which is when demand for a product causes prices to increase, and cost-push, when there is not enough supply of goods. Demand-pull inflation can be seen as a positive for the economy, while cost-push is negative.
For Idahoans, cost-push inflation could see a recession similar to the 2008 recession, Black said, which included higher interest rates on property and took a long time to recover from. But he did acknowledge that the 2008 recession resulted from the housing market crash and that he hopes a recession this time would be similar to the one seen at the start of the COVID-19 pandemic, which was wrapped up quickly.
Nationwide, a demand-pull-induced recession could mean a cooling job market, higher levels of unemployment, a decrease in the demand for goods and services, and a struggling stock market, according to the Swiss non-governmental organization World Economic Forum.
“Global growth is slowing sharply, with further slowing likely as more countries fall into recession,” World Bank president David Malpass stated in a news release on Sept. 15. “My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging markets and developing economies.”
Why is gas usually cheaper in winter?
Even without the worry of a global recession, gas prices typically drop in the fall as a cheaper blend is produced.
Liquid fuel uses a measure called the Reid vapor pressure, which measures its volatility — how easily the fuel ignites. During the summer, the Environmental Protection Agency regulates the level of vapor pressure to help reduce emissions from gasoline that contribute to ground-level ozone.
But during the winter, gas companies can produce gas with a higher Reid vapor pressure reading because it more easily ignites and helps start the car in cold weather, according to the real-time fuel website GasBuddy.
Gas prices typically fall between 10 to 30 cents starting in mid-September, according to GasBuddy, as gas stations transition to cheaper winter gasoline and people travel less.
Conde also recommended ways to save money on gas ahead of Thanksgiving, which is the busiest travel time of the year.
“It has become a real challenge for some Idaho families to deal with the continued high pump prices,” AAA’s Conde said in the release. “Take anything heavy that you don’t need out of your car or off your roof rack, group your trips whenever possible, and try to avoid traffic congestion if you can.”
Gas prices in Idaho
As of Wednesday, residents of Benewah County in North Idaho were enjoying the cheapest gas in the state, at $4.13 per gallon. Meanwhile, Blaine County continues to suffer some of the worst prices in Idaho, at $4.77 per gallon.
Blaine County and other Central Idaho counties, such as Valley and Boise, have had consistently higher prices than the rest of the state since prices hiked in March.
The following interactive graph shows the price of gas in Ada, Benewah and Blaine Counties, using data from AAA.
Check the interactive map below to see how much your county pays — the map updates daily with the most recently available prices according to AAA. You can check gas prices for local gas stations using GasBuddy to find the lowest prices near you.
