Gasoline prices are hitting marks previously not seen since last spring before COVID hit the United States.
According to GasBuddy.com, the nation’s average price of gasoline is again on the rise, posting a slight 0.4 cent per gallon rise from a week ago to $2.87 per gallon as of April 26.
“Last week saw limited upward movement in gas prices, tying the previous high water mark we last saw in March, signaling that perhaps we may see additional upside as most states in the nation have finished the transition to EPA-mandated summer gasoline,” said Patrick De Haan, head of petroleum analysis for GasBuddy.
“While gasoline demand did dip last week for the third straight week according to GasBuddy data, it was yet another small decline, and as temperatures continue to warm ahead of summer, it wouldn’t surprise me that demand will rebound in the weeks ahead and we could continue to see gas prices push higher.
“For now, however, it doesn’t appear that any rise in price would be significant, so motorists shouldn’t be too concerned at this point, but may see average prices inch higher.”
AAA reports similar findings
“At 9.1 million barrels per day (b/d), U.S. gasoline demand recorded its second highest measurement since mid-March 2020, indicating that motorists are filling up more often,” the company said in a release.
“This latest demand reading is the highest spring number released by the Energy Information Administration (EIA) in two years. In fact, it is only about 3% below the same week in 2019.”
AAA further stated that both demand and supply “have steadily increased in the past five weeks, but weekly gasoline supply builds are trending less substantial. On the week, supply only saw a 100,000 barrels of oil (bbl) build to 234.9 million bbl, most likely due to high consumer demand.”
“The jump in demand to 9.1 million b/d combined with the small increase in supply pushed the national gas price average two cents more expensive on the week to $2.88,” said Jeanette McGee, AAA spokesperson. “This is the largest one-week national jump we’ve seen in five weeks.”
Production holding steady here, but international events loom
GasBuddy figures show the price of a barrel of West Texas Intermediate crude oil held mostly steady last week, but on April 26 trade was down $1.23 to $60.91 per barrel, more than $2 lower than last Monday’s roaring start at $63.21.
Brent crude oil was also sagging early on this morning, dropping $1.31 per barrel to $64.80, a drop of over $2 from last week’s start. Oil’s struggle early this week may be partially due to India seeing its fifth straight day of record Covid cases, while last week closed the week with buying in oil markets.
In addition, Japan is also seeing a rise in COVID cases, leaving energy markets concerned over the uptick in cases in the two major oil consuming nations.
Also, reports suggested last week President Joe Biden was considering easing the sanctions on Iran to get them back to the table, which may again allow Iran’s crude oil access to global markets, leading to additional supply.
Gas price trends
According to GasBuddy, the most common U.S. gas price encountered by motorists was $2.69 per gallon, unchanged from last week, followed by $2.79, $2.59 and $2.89.
The average cost at the priciest 10% of stations stands at $3.79 per gallon, up 1 cent from a week ago, while the lowest 10% average $2.44 per gallon, up 2 cents from a week ago.
The median U.S. price is $2.77 per gallon, up 2 cents from last week and about 10 cents lower than the national average.
The states with the lowest average prices: Mississippi ($2.55), Texas ($2.56) and South Carolina ($2.56).
The states with the highest priced states: California ($3.98), Hawaii ($3.69) and Nevada ($3.46).
More vacation travel, less summer commuting
McGee said that 2021 should be an interesting year for travel. Millions of Americans put off their annual summer vacations in 2020 thanks to COVID. But circumstances have changed.
“There is pent-up demand for summer travel,” McGee said. “But things will still be different. We did a study in 2019 about whether rising gas prices will affect travel plans. The magic number seemed to be $3.25 per gallon. When gas prices reached that level, people said they would change plans.”
Another factor affecting gasoline demand is commuting, McGee said. People will be traveling more for vacations this summer. But many are still working at home, so there will be much less commuting and that will affect demand and price fluctuations.
AAA expects gas prices this summer to go up, McGee said. It might go as high as $3 a gallon, but the organization doesn’t expect prices to go beyond that.”
If gas prices go higher, people tend to do two things. One is spend less once they reach their destinations. Things like not eat out for every meal. The other is to plan shorter trips. People might spend the same amount on gas but that money will not take them as far.
McGee said that there are two big summer travel periods — Memorial Day and the Fourth of July.
“We will get a much clearer picture of summer demand once we see the Memorial Day figures,” McGee said. “Those numbers are usually a very good indicator of summer travel demand. We expect more traveling than in 2020, but not as much as in 2019.”