Whether taking a Fourth of July road trip or firing hot dogs on the barbecue this holiday weekend, the American people can enjoy some price relief, from modest to significant. But while the Independence Day festivities will come with lower costs, the local buzzkill will need to ask: Can this trend be sustained heading into the nation's 250th shindig?
Driving on the Fourth of July
Gas prices have not been this low in four years, according to industry data. The American Automobile Association reports that the national average for a gallon of gasoline is about $3.17, down almost 10% from a year ago. Alternatively, Gas Buddy says the national average is about $3.14 per gallon, down more than 32 cents from last year.
The sharp decline is multifaceted, mainly because crude oil prices, which account for half of the cost at the pump, have tanked this year. West Texas Intermediate (WTI) futures have declined since the beginning of 2025, currently trading at around $67 per barrel on the New York Mercantile Exchange. Likewise, Brent, the global benchmark for oil prices, has fallen 8% to below $70 on London’s ICE Futures exchange.
The Iran-Israel conflict triggered a sharp rise in oil prices in June, but a de-escalation caused the cost of a barrel of black gold to fall to levels seen before the renewed Middle East tensions. The world is poised to face a supply surplus this year as steady domestic production and additional capacity by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, have weighed on energy markets. A slowing Chinese economy has also trimmed expectations of petroleum demand.
Will the good times of lower crude and gas prices persist? This is hard to determine, but the energy sector could be preparing for these prospects. The Baker Hughes Oil Rig Count, a measure of drilling activity, has declined sharply this year, falling to a four-year low of 432 for the week ending June 27. Indeed, according to the Dallas Federal Reserve, the average break-even oil price for crude producers is $61 a barrel.
The Kitchen Is Open
You know price inflation is in a better position when that cheap, er, frugal Uncle Billy is hosting a Fourth of July barbecue for the first time since the Bush administration.
According to the American Farm Bureau Federation, an Independence Day cookout will cost $70.92 for ten guests this year, down slightly from the all-time high of $71.22 in 2024. While it is only a small difference, the drop is quite symbolic after years of sticker shock for barbecue favorites, from ice cream to chicken breasts.
"While the survey does not include an exhaustive list of Fourth of July options, it serves as a snapshot of prices families are facing this summer," the report stated. "The marketbasket survey shows an increase in the cost of beef, potato salad and canned pork and beans, while there are drops in the cost of pork chops, chips and hamburger buns."
Using data from the Consumer Price Index, researchers estimated that the price of two pounds of ground beef increased by 4.4%; two pounds of chicken breast decreased by 0.5%, and three pounds of pork chops plummeted by 8.8%. Homemade potato salad has soared, but a bag of potato chips has dropped a bit. Chocolate chip cookies and ice cream were essentially unchanged this year.
Like gasoline prices, it remains to be seen if the slow and steady downward trend in food inflation will persist heading into next year's Fourth of July celebration.
Talking Interest Rates on July 4
Who doesn’t want to talk about interest rates during a backyard barbecue on a sunny day? If so, it would be prudent to inform the other person that interest rates are surprisingly lower than a year ago, even during the tariff tumult and fiscal frenzy.
The benchmark ten-year Treasury yield, which influences everything from Uncle Sam's borrowing costs to mortgage rates, was 4.355% last year. Today, it is hovering around 4.29%.
According to Freddie Mac's Primary Mortgage Market Survey, the average 30-year fixed-rate mortgage was 6.77%, down from 6.95% at the same time last year.
If the Federal Reserve follows through on rate cuts and President Donald Trump’s Big Beautiful Bill is more fiscally responsible than his critics suggest, borrowing costs could be even lower in 2026.
Inflation Pain
Prices will never return to pre-crisis levels, regardless of what the president does. The current administration has accepted that the only way to resolve inflation is to ensure wages outpace prices. Early numbers indicate that real (inflation-adjusted) wage growth for blue-collar workers registered the largest increase in nearly 60 years, rising 1.7% in the first five months of 2025.
Who knows? Perhaps by next year, a family of four can visit the local supermarket, purchase the week’s groceries, and discover the cashier giving back change, a relic of a bygone era.
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