The upward pressure on gasoline prices has eased a bit, but the pump price is significantly higher than it was a year ago when the U.S. was beginning to recover from recession, following the surge of COVID-19 cases in 2020.
AAA reported this week the national average price for a gallon of gas leveled off at $3.41, down a penny since last week easing some of the pressure on consumers. The current average is 11 cents more than a month ago and $1.29 more than a year ago, and 81 cents more than at this time in 2019.
Since Oct. 30, the national average has fallen on nine different days, after having risen steadily each of the previous 31 days when the price of gasoline jumped 17%, according to the federal Energy Information Administration, raising fears of inflation.
“A slight dip in gas demand, possibly due to seasonal driving habit changes, is contributing to some price relief at the pump,” said Andrew Gross, AAA spokesperson. “Unfortunately, the ongoing tight supply of crude oil will likely keep gas prices fluctuating, instead of dropping, for some time.”
Michael Sivak, a transportation analyst with Sivak Applied Research, noted in a report this week the price of gasoline has increased even as the road miles traveled by American motorists also have continued to decline. The decline in miles traveled has been slower during the summer than when lockdown disrupted the economy in the spring of 2020, Sivak noted.
Gasoline prices highest in California
AAA said the nation’s most expensive markets include California where gasoline is $4.68, Hawaii at $4.34 per gallon, Nevada at $3.97, Washington at $3.87, Oregon at $3.78, Alaska at $3.71, Utah at $3.70, Idaho at $3.69, Arizona at $3.66 and Washington, D.C. at $3.62.
According to new data from the EIA, gasoline demand dropped from 9.5 million barrels per day to 9.26 million. This drop coupled with an increase in the domestic crude oil supply caused downward pressure on prices, according to AAA.
However, pump prices will likely remain elevated for consumers as long as oil prices are above $80 per barrel, according to AAA. Meanwhile, The New York Times reported the Biden administration is considering releasing crude from the National Petroleum Reserve.
Biden administration considering other steps
In addition, the Biden administration is promoting the adoption of electric vehicles, which will gradually reduce U.S. dependence on oil and is also reportedly considering an investigation in price gouging around the pump.
White House Press Secretary Jen Psaki said the administration is looking at every tool in its arsenal to address the increased price.
Crude prices decreased slightly last week as inflation fears weighed on the market. Prices also fell after EIA reported that the total domestic crude supply increased by 1 million barrels to 435.1 million barrels last week.
However, according to EIA’s data, the total domestic crude supply is still down 11% compared to the previous year at this time, helping to keep elevated price pressure on crude.