As the national average for a gallon of gas rose less than three cents over the past week to reach $4.62, AAA reported that a dip in gasoline demand provided drivers with some stability at the pump. However, this respite could be brief.
Crude oil has moved above $115 a barrel due to fears of further global supply constraints caused by a European Union (EU) ban on Russian oil exports. And domestic gas demand may again start to climb as drivers fuel up for the three-month-long summer travel season, which began this Memorial Day weekend. AAA forecast nearly 35 million travelers hit the road for Memorial Day. It’s the highest number since 2019, despite record prices at the gas pump.
“So far, the pent-up urge to travel caused by the pandemic outweighs high pump prices for many consumers,” said Andrew Gross, AAA spokesperson. “But 67% of drivers recently surveyed told us they would change their driving habits if gas hit $4.50 a gallon. That number rises to 75% at $5 a gallon. If pump prices keep rising, will people alter their summer travel plans? That remains to be seen.”
According to Energy Information Administration (EIA) data, total domestic gasoline stocks decreased by 500,000 bbl to 219.7 million bbl last week. Gasoline demand also dipped from 9 million b/d to 8.8 million b/d, approximately 700,000 b/d lower than a year ago. The softening of gas demand helped minimize price increases ahead of Memorial Day. However, gas demand may spike this week after drivers took to the roads for the holiday. But pump price increases could be limited if demand slows again following the holiday weekend.
Today’s national average for a gallon of gas is $4.62, which is 45 cents more than a month ago, and $1.58 more than a year ago.
Quick Stats
The nation’s top 10 largest weekly increases: Wisconsin (+11 cents), Colorado (+11 cents), California (+10 cents), Utah (+10 cents), Oklahoma (+9 cents), Iowa (+9 cents), Minnesota (+9 cents), North Dakota (+8 cents) and Montana (+8 cents).
The nation’s top 10 most expensive markets: California ($6.16), Hawaii ($5.43), Nevada ($5.30), Washington ($5.23), Oregon ($5.21), Alaska ($5.21), Illinois ($5.00), Arizona ($4.95), New York ($4.92) and Washington, D.C. ($4.84).
Oil Market Dynamics
At the close of Friday’s formal trading session, WTI increased by 98 cents to settle at $115.07. Crude prices rallied at the end of last week following news that the EU was seeking unanimous support of all 27 member countries to impose a ban on Russian oil later this year. Yesterday, EU leaders announced they will ban 90% of Russian oil imports by the end of 2022. Crude prices also increased last week after EIA reported that domestic crude supply decreased by 1 million bbl to 419.8 million bbl. The current level is approximately 13.3% lower than during the third week of May 2021. Crude prices could rise again this week if EIA’s next report shows total domestic supply remains tight.
