Gas Prices Drop To $3.85 Just As America Hits The Road

Easing Into July

The past few weeks have brought some relief for car owners, as gas prices have continued to ease, even if only gradually. It is a welcome development with the Fourth of July approaching, when millions of Americans are expected to hit the road.

According to AAA, the national average as of July 1, 2026, is $3.85 per gallon, down about $0.08 from last week’s $3.93. That is still well above the sub-$3 average seen before the U.S.-Iran conflict began in late February, but it is at least back below $4 per gallon after dipping under that mark in mid-June.

The State-By-State Reality

California is often singled out for high gas prices, though it currently ranks second behind Hawaii, where the average stands at around $5.49 per gallon. Meanwhile, Indiana has the nation’s lowest average at around $3.18, followed by Texas and Oklahoma at $3.34 and $3.38, respectively.

For now, the situation in the Strait of Hormuz remains complicated, with shipping still recovering even after the waterway reopened. Until traffic through the passage fully normalizes, gas prices are likely to remain uncertain.

AAA said demand could rise as a record number of Americans prepare to travel for Independence Day weekend, with 85% of those travelers planning to drive. For those making the trip in an all-electric vehicle, AAA noted that the national average cost of public charging held steady this week at 41 cents per kilowatt-hour. West Virginia, Hawaii, and New Hampshire are the most expensive states for public charging, while Kansas, Missouri, and Iowa are the least expensive.

Fuel Prices Shape Demand

Beyond current owners, buyers are also feeling the impact of elevated gas prices. General Motors is seeing a faster-than-expected shift away from larger, gas-heavy vehicles such as pickup trucks and SUVs. There is also growing interest in more affordable and more fuel-efficient vehicles.

That means hybrids have taken the spotlight, with sales reportedly gaining momentum. Hyundai, for example, recorded a 90% year-over-year improvement in hybrid sales in May 2026. They remain a practical option for buyers who may not be ready to go fully electric, with models like the Toyota RAV4 Hybrid and Honda CR-V Hybrid among the familiar choices in this space.

With gas prices still uncertain, buyer behavior could remain difficult to predict, adding another challenge for automakers.