As people get out of the house more often and get to the gasoline pump they are seeing that prices are creeping up. Check the chart below. Experts are saying $3/gallon is an easy possibility by Memorial Day.
Seems as though there are a few reasons for the gasoline price increases. There’s less gasoline stockpiled right now. “Inventories fell by 13.6 million barrels – the most in weekly data that goes back to 1990 – after a deep freeze paralyzed much of the Gulf Coast refining sector.” (Source)
Crude supply declined. “OPEC cut production by 10 million barrels per day when the COVID-19 pandemic began and demand dropped. Maintaining those cuts now as demand increases is causing gasoline prices to spike.” (Source)
“Demand for oil has actually been declining … but supply has been falling even faster, with the result that prices have now topped $64 for a barrel of Brent [North Sea] crude. Gas prices are hitting new post-pandemic highs across the country, but this isn’t a story of America reopening. It’s really just a function of the price of oil going up.” (Source)
Demand may be changing. “Gasoline demand last week reached the highest in nearly a year, up 15% from the prior week and ‘now just single digits’ away from gasoline demand before the pandemic,” says MarketWatch, which reports gasoline’s average at $2.74, up 33-cents over a year ago as the nation started its shutdown.
During the pandemic many refineries were not fully utilized. “Many refineries were running below capacity during the pandemic to avoid swelling inventories with unused product. Refinery utilization may increase as refineries ramp back up ahead of the summer holiday.” (Source)
What else can raise gasoline prices? Summer. “Another factor expected to cause a slight uptick in gas prices is the use of summer-blend gasoline. The Environmental Protection Agency requires the use of less volatile blends of gasoline when temperatures warm up in order to reduce emissions. This comes with logistical challenges than can sometimes add another 5 to 15 cents per gallon.” (Source)
Ever wonder what goes into the cost of a gallon of gasoline? Check this from the US Energy Information Agency.
Get ready. There is a cost to getting out after the shutdown and it will be at your gasoline station.
What are gasoline prices around the nation?