Originally Published: 15 MAY 23 15:55 ET

By Matt Egan, CNN

(CNN) -- Filling up at the pump might not be cheap. But gas prices are miles away from last summer's nightmare.

At this point last year, gas prices were racing toward $5 a gallon, angering Americans, alarming central bankers and threatening the entire economy.

Flash forward 12 months: The national average currently stands at $3.54 a gallon, according to AAA. That's down 21% from a year ago when the average was $4.47 a gallon and 29% from the June 2022 record of $5.02 a gallon.

There are multiple reasons for the cheaper gas -- and not all of them are good. But the fact gas prices are much closer to $4 than $5 is a clear positive for consumers as they gear up for the start of summer driving season and more evidence of the economy-wide inflation cooldown.

"We've seen a lot of improvement," said Patrick De Haan, head of petroleum analysis at GasBuddy. "The American consumer is slightly smiling at the lower price of gasoline but I don't think it's a full-blown smile yet because the overall economic feeling is careful."

Fears of a recession -- driven in part by high inflation -- have helped keep a lid on oil prices. That in turn has driven down the price of gasoline and other petroleum products.

The Federal Reserve's war on inflation, marked by 10 straight interest rate hikes, has also driven down oil and other commodities.

US oil output rebounds

But there are also positive factors behind the tamer gas prices: The doomsday scenario of Russia's oil production getting derailed has not materialized, even after more than a year of the war in Ukraine.

US oil production also continues to gradually rebound, serving as a powerful counter to production cuts by OPEC and its allies.

In fact, annual US oil output this year is projected to surpass the pre-Covid record set in 2019, according to the Energy Information Administration.

All of this has helped depress not just gasoline prices but diesel, too.

The national average for diesel -- a key fuel in the economy because of it powers trucks that transports consumer goods -- has dropped by 28% over the past year to $4 a gallon today.

Gas is not cheap

To be sure, gas prices are not nearly as cheap as back in 2020 when the national average crashed below $2 a gallon.

Of course, that plunge was driven by the Covid-19 pandemic. Few people were able to enjoy cheap gas back then.

Some US states have not found relief this spring. For instance, in Arizona the average price for regular gasoline stands at $4.67 a gallon -- down just slightly from $4.75 a gallon a year ago.

In California, drivers face an average of $4.80 a gallon for regular gas, though that is down from $5.96 a year ago.

Will there be a summertime surge?

Looking ahead, gas prices will probably remain far away from last summer's peak.

GasBuddy's De Haan said the odds are rising that the national average does not hit $4 a gallon this summer, a shift from his previous call for that milestone to be hit as soon as this month.

"I do expect summer gas prices will be rather tame," he said.

However, De Haan cautions there are at least two wildcards that could send gas prices shooting higher once again: A powerful hurricane that knocks out major refineries or an economic rebound that drives up demand for energy.

De Haan notes that gasoline and oil inventories remain relatively low, leaving them subject to a demand spike.

"We're not awash in oil and we could very quickly be in a danger zone," De Haan said. "If we return to economic prosperity, we're going to return to the same gas price explosion as last year."