Gas prices are at their highest levels in the last seven years. Even worse, prices might remain elevated all summer even as Americans prepare to hit the road on their first post-coronavirus trips.
Gas Prices During Memorial Day Weekend
According to the American Automobile Association, the current average price for a gallon of unleaded gasoline is $3.04 per gallon.
This is 16 cents more than a month ago and $1.08 per gallon higher than last year. Despite the increase in gas prices, the AAA expects 37 million Americans will travel this Memorial Day weekend.
This represents a 60% increase over last year when many businesses shut down due to the pandemic.
In addition, gas prices jumped earlier this month after a cyberattack shut down the Colonial Pipeline. This oil and fuel network primarily services the East coast and had to stay offline for six days while owners frantically communicated with the hacker group who shut down the pipeline.
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Many car owners, especially from the Southern and Southeastern states, panicked and started hoarding gas. As a result, gas prices shot up by more than 20 cents per gallon.
Gas Prices Shoot Up Due to Increased Demand
Demand for fuel rose last week, reaching 9.5 million barrels per day. This is the highest fuel consumption rate since March 13, 2020, which happened during the early days of the pandemic.
“There’s part of me that feels like the market has a potential to overheat this summer, just because people are stuck here,” remarked Patrick De Haan.
De Haan, who is head of petroleum analysis at GasBuddy, said he expects more driving vacations since international travel remains elusive.
“Everyone wants to get out. If there’s any hiccup in the system this summer, it’s going to be hard to fuel up,” he said.
Also, De Haan said that prices might spike some more this summer. Any unscheduled refinery outages or random hurricanes can disrupt the flow of crude or refined oil products.
“Usually when prices go up 50 cents, people say they’ll just stay home, but not this year, with the pent-up demand. If there are any kinks in the system, it could get ugly,” he said.
Many Americans Find Gas Prices Irrelevant
AAA warned that some stations in the Southeast can continue experiencing supply shortages during this Memorial Day weekend.
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Drivers won’t have any problems filling up their tanks, but once they get into popular travel areas like beaches, mountains, or national parks, low supplies could greet them.
De Haan cited a GasBuddy survey showing that 53% of Americans saying that gas prices are irrelevant. Another 57% expect to take at least one road trip this summer.
“I think it’s possible that we will have some blockbuster weekends that break records. It’s just because Americans have been stuck at home,” he said.
Gas Prices Peak During Summer
Currently, gas prices range from a low of $2.75 to $3.25 for a gallon of unleaded gasoline. De Haan and other experts say the national average might dip lower as prices go down in areas affected by the Colonial pipeline outage. The latter transports gasoline from Texas across the South and North to New Jersey.
As a rule, gas prices usually peak early in the summer driving season. However, experts say that for this year, there won’t be a peak before July 4th.
Tom Kloza, global head of energy analysis at OPIS said that he does “think we’ll see a June swoon,” though prices will stay around $3. Pressure is building from a shortage of tank truck drivers.
This could make fuel deliveries more difficult in remote areas far from storage terminals. “I think it’s going to be very lumpy,” he said, noting that demand could surge some days to a high of 10 million barrels a day.
Watch the CBS 17 news video reporting that Memorial Day weekend gas prices highest since 2014:
Will you take a Memorial Day vacation this year involving a road trip? Will the price of gas affect your decision?
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