The average price paid by U.S. motorists for a gallon of self-service regular nudged past the $2 mark for the first time since late March – and, with pandemic lockdowns ending in most parts of the country, Americans can expect to see even higher prices in the days and weeks to come.
The slow upward creep reflects not only the phase-out of shelter-in-place and work-at-home policies but the apparent resolution of a bitter dispute between Saudi Arabia and Russia which had resulted in a flood of cheap oil on the global market.
As of 10 a.m. Wednesday morning, tracking service GasBuddy.com saw the price of regular gasoline jump to an even $2.00, though AAA, which tracks prices on a daily basis, still shows the national average at $1.982. It’s numbers could cross the $2 threshold within the next day or two.
“Americans are slowly but steadily returning to driving, causing gas prices to increase across the country,” said Jeanette Casselano, AAA spokesperson.
This marks the fifth week in a row that fuel prices have gone up, according to those tracking industry trends, after several months of decline that saw the national numbers drop as low as around $1.30 in late April. Some states, notably including Oklahoma and Wisconsin, plunged to averages of around $1.10, with pumps in some areas serving up regular for less than a dollar.
The decline reflected a confluence of events, starting with the feud that saw Russia and Saudi Arabia, two of the world’s largest oil producers, each refuse to cut production, dumping petroleum onto the market to the point where some tankers couldn’t dock and offload their cargos. At one point, that briefly sent the price of crude oil falling into negative territory.
On top of that, most of the U.S. was subject to lockdowns meant to slow the spread of the coronavirus, traffic in major cities like Los Angeles, Chicago and New York falling by as much as 80%, according to navigation services such as TomTom.
Many states have now ended shelter orders, others reducing the number of citizens covered. Traffic has been growing in much of the country, though real-time monitoring by TomTom Wednesday showed it still well below pre-pandemic levels.
Nonetheless, demand is up – and the Saudi-Russian dispute may be coming to an end. The two major oil producers came to a temporary truce last month that saw modest cutback in oil production. And there were indications on Tuesday that they would extend the cuts, though it was far from clear such a deal would hold. The Saudis may boost production by as much as 1 million barrels per day, according to a report Wednesday in the Financial Times.
For now, however, the price of Brent Crude, a key petroleum benchmark, is hovering at just under $40 a barrel, about double its April low.
From a U.S. motorist standpoint, GasBuddy shows prices for regular are, on average, about 23 cents a gallon higher than a month ago, and about 2 cents up from this time last week. But the current average is still around 83 cents below what motorists paid on June 3, 2019.
Prices continue to vary widely from state to state, Mississippi currently showing the lowest average of $1.598. Among the 48 contiguous states, Californians, as normal, are paying the most, an average $2.935. But that’s down nearly $1.07 from a year ago.
How far up things could go is far from certain. A key question is whether the Saudis and Russians will maintain some semblance of a truce, according to various petro-analysts.
Meanwhile “(t)he pace of increases has begun to throttle back over the last week in most states as gasoline demand’s recovery has slowed, keeping prices from matching their rapid pace from just a couple weeks ago,” said Patrick De Haan, head of petroleum analysis for GasBuddy. “Prices will continue to move in lock-step with the coronavirus situation, so it remains challenging to know where prices will go in the weeks ahead.”