The recent surge in the price of gas may seem spooky this Halloween, but it’s not frightening people away from driving as demand continues to rise. The national average price for a gallon of gasoline rose six cents over the past week to hit $3.38, according to AAA. The pump price has gone up every day in the past 27 days, adding approximately 20 cents to the cost of a gallon of gas.
“With the U.S. economy slowly recovering from the depths of the pandemic, demand for gas is robust, but the supply is tight,” said AAA spokesperson Andrew Gross. “We haven’t seen prices this high since September of 2014.”
The recent rise in the pump price is due to higher demand coupled with a decline in stocks alongside elevated crude prices. Global oil production is still below pre-pandemic levels. According to new data from the Energy Information Administration (EIA), total domestic gasoline stocks decreased by 5.4 million bbl to 217.7 million bbl last week. However, gasoline demand increased from 9.19 million b/d to 9.63 million b/d. Since the cost of oil accounts for more than half of the pump price, consumers will be paying more as long as crude prices remain high.
Today’s national average of $3.38 is 20 cents more than a month ago and $1.22 more than a year ago, and 77 cents more than in 2019.
The nation’s top 10 largest weekly increases: North Carolina (+14 cents), Florida (+14 cents), Arizona (+12 cents), Rhode Island (+11 cents), New York (+11 cents), New Hampshire (+10 cents), Connecticut (+10 cents), New Jersey (+10 cents), Pennsylvania (+9 cents) and Texas (+9 cents).
The nation’s top 10 most expensive markets: California ($4.54), Hawaii ($4.26), Nevada ($3.92), Washington ($3.87), Oregon ($3.78), Alaska ($3.72), Idaho ($3.71), Utah ($3.68), Washington, D.C. ($3.57) and Pennsylvania ($3.56).
Oil Market Dynamics
At the close of Friday’s formal trading session, WTI increased by $1.26 to settle at $83.76. Crude prices took a slight step back last week due to weakness in the U.S. equity markets; however, prices increased overall after EIA’s weekly report revealed that total domestic crude inventories decreased slightly to 426.5 million bbl.
The current storage level is approximately 13 percent lower than the level at this same time last year. Given supply concerns, the market could continue to push prices higher this week if EIA’s next report shows further tightening.