Gas prices are weighing on drivers and the EIA now expects demand to drop as Americans change their driving habits

• The EIA predicts gasoline demand in the US to hit 9.07 million per day in July, 2.2% lower than last month's forecast. 
• Retail gas prices have dropped for several weeks, but they remain almost 50% higher than a year ago. 
• The average price for a gallon of gas in the US hit $4.655 on Tuesday, according to AAA.

The Energy Information Administration expects the US to consume less gasoline than previously thought as high gas prices weigh on Americans during the summer driving season. 

The EIA predicted gasoline demand in the US will hit 9.07 million barrels per day in July, which is 2.2% lower from last month's forecast, according to its latest Short-Term Energy Outlook.

The trimmed forecast reflects how prices at the pump are still weighing on Americans. While retail gas prices have been dropping for weeks now, with the average price for a gallon of gas in the US hitting $4.655 on Tuesday, they remain roughly 50% higher than a year ago.

At the start of summer, there were already signs of demand destruction. In May, demand on a four-week rolling basis hit its lowest mark for that time of year since 2013, excluding pandemic months in 2020.

Now, the demand slowdown has dashed expectations for a driving season resembling something of pre-coronavirus times.

Meanwhile, inflation in the US has soared to multi-decade highs, with the Consumer Price Index reaching 8.6% in the year through May, and Wednesday's reading expected to come in hotter. 

But consumers should see some relief at the pump next year. The EIA expects a gallon of gas to cost an average of $3.57 in 2023, down from an anticipated 2022 average of $4.05.