Gasoline Prices Rise As Demand Rises Column Alex Mills
Demand for petroleum products continues to grow during the Memorial Day holiday, pushing gasoline prices above $ 3 per gallon for the first time in seven years.
AAA said the average U.S. retail price was $ 3.03 on May 26, up from $ 1.96 last year at the height of the economic downturn caused by the coronavirus. The average price in Texas was $ 2.732 this week, up from $ 1.62 last year.
Crude oil, the main gasoline expense, rose to $ 66 a barrel this week, up $ 32 from a year ago.
Crude oil inventories have been declining steadily since June 2020, when inventories hit a record 540 million barrels. This week, inventories fell another million barrels to 484 million, according to the Energy Information Administration (EIA).
AAA expects more than 37 million people to take trips this Memorial Day weekend, traveling 50 miles or more from their homes between May 27 and May 31, a total of 60% increase by compared to 2020, when 23 million people traveled, the least since the AAA record began in 2000.
While the AAA expects significantly more trips this Memorial Day than in 2020, its estimate is still around 6 million fewer drivers than in 2019.
“In the week leading up to Memorial Day 2020, gasoline demand was 7.0 million barrels per day (b / d), compared to an average of 9.5 million b / d for the same week for 2015- 2019, ”EIA reported.
“The four-week average gasoline demand increased 13% between the end of February 2021 and the end of April 2021. As of May 21, the total weekly demand for automotive gasoline was 9.5 million bpd, in up 2.5 million bpd from the four-week average for the same period last year. “
Gasoline demand remains 37,000 bpd below 2015–19 seasonal average, according to EIA
The EIA said the increase in vaccinations and the gradual recovery in overall economic activity in the United States since the start of 2021 contributed to the increase in demand for gasoline in early summer.
Refinery and pipeline disruptions in recent months have contributed to upward pressure on retail gasoline prices. The unexpected shutdown of Colonial Pipeline in early May further reduced regional gasoline inventories along the East Coast, America’s largest gasoline market.
Fuel shortages at retail stations and terminals that normally rely on the pipeline have pushed up regional gasoline prices while preventing Gulf Coast refiners from increasing production to meet demand. from the East Coast, the EIA said.
A mixture of higher oil prices with increasing demand coupled with reduced supplies is a price increase scenario.
Alex mills is the former chairman of the Texas Alliance of Energy Producers.