As Memorial Day and the summer driving season approach, American drivers can take to heart –albeit temporarily – that gasoline prices are slightly lower than they were at this time last year. Gasoline prices are also less than they were at this time in 2008, the year when prices spiked above $4/gallon. The AAA Daily Fuel Gauge Report shows regular gasoline averaging $3.676/gallon, or 15 cents cheaper than regular gas last year, when it was $3.828/gallon. The reprieve at the pump comes against the backdrop of falling crude oil prices in anticipation of progress to be made in talks between the US, Europe and Iran regarding Iran’s nuclear program. Hopes that Iran might agree to a negotiated solution including the possibility of UN inspectors has taken some of the war premium out of crude oil prices that rose sharply over the spring due to threats from Iran that it would try to close the Strait of Hormuz, the vital transit point for over 20 percent of world oil supply.

Oil prices would be even lower but for the risks that an escalating conflict with Iran could curtail Middle East supplies, either through the imposition of stricter sanctions against Iranian oil exports in July or worse, through an escalation to a regional war.

But for the Iranian situation, the downward trend for oil prices might be more dramatic, given rising inventory levels, the worsening economic situation in Europe and a long term rosier picture that the United States’ upward trend in onshore oil production could gain momentum over time. A decision in the state of California that the Obama Administration has proposed be adopted in the nation as a whole to tighten corporate average efficiency standards for automobiles to 54.5 miles per gallon would also ensure that US oil demand remains on a more sharply declining path.

Oil traders say that the shale boom storyline of steadily rising US production is finally winding the “peak oil” story out of pricing mindsets, leaving open the possibility of a more bearish permanent view of the long term oil price down the road, were Middle East news to fade more definitively. But for now, no one is willing to bet on a return to $70 a barrel and instead, the backdated years in derivatives markets are only discounted about $5 a barrel from today’s values. Moreover, Americans will have to stay tuned to Tehran to know whether the current reprieve in oil prices will last. Any breakdown in talks, such as the blip today, could usher higher international crude oil prices right back to the fore and with them, higher prices at the pump.