While retail gasoline prices in the United States are holding relatively steady, it could be a matter of months before consumers see sticker shock at filling stations, analysts said Tuesday.
Crude oil prices are closely linked to retail gasoline prices in the United States, but the relation has been uneven during the pandemic. West Texas Intermediate, the U.S. benchmark for the price of oil, is up a staggering 49% since Nov. 1, when vaccine developments to inoculate the public against COVID-19 first emerged. By contrast, the retail price for a gallon of regular unleaded gasoline is up only about 10% since early November.
Patrick DeHaan, the head of petroleum analysis at GasBuddy, said from Chicago that crude oil prices were supported by vaccine developments that would suggest consumer demand in general could recover by the time summer roles around.
“Our own data shows gasoline demand is holding fairly resilient, and with some states loosening restrictions again, there’s hope that demand will continue to grow,” he told us.
In the continental United States, California holds the distinction of boasting the highest gasoline price in the nation at $3.35 per gallon. Mississippi has the lowest retail price at $2.08 per gallon, supporting the estimate for a national average price of $2.39 per gallon from automotive club AAA.
Jeanette Casselano-McGee, a spokesperson for AAA, said Tuesday that the spike in crude oil prices was the main element supporting gains in the price at the pump, which is up some 13 cents per gallon since the start of the year.
“The higher price of crude is outweighing sustained low gasoline demand and a build in gasoline supply,” she said in a statement. “Motorists can expect gas prices to continue to climb through at least the end of the month.”
Federal data out on Wednesday will provide a snapshot of consumer demand for gasoline. Last week, the Energy Information Administration reported total products supplied, which serves a proxy for demand, averaged 18.8 million barrels per day for the period ending Jan. 15, down about 6% from the same period last year.
Patricia Hemsworth, a senior vice president at Paragon Markets, said from New York that inventory levels for gasoline aren’t too much higher than the five-year average, all things considered.
“Demand has been off, but not terrible,” she said.
GasBuddy’s DeHaan said that, with the trend in crude oil prices supported by production restraint from parties to an OPEC-led curtailment effort, motorists won’t see a break in gas prices any time soon.
“It’s only a matter of a couple months until our current prices exceed the year-ago level,” he said.
(Edited by Bryan Wilkes and Alex Patrick)