Pump prices across the country are getting more expensive as we head into the last weeks of the year, according to AAA. Since Monday (Dec. 14), the national gas price average has jumped six cents to $2.22. While not the most expensive price we’ve seen this year, it is the highest national average since mid-September.
Two factors have contributed to driving up the price at the pump: rising crude oil prices and tightening supply. The domestic price of crude (WTI) has been steadily rising since November, with prices topping $49/bbl. Prices have not been this expensive since February before stay-at-home guidance was introduced across the country. Prices began to rise last month alongside vaccination news and have only increased with it becoming available.
Last week, the Energy Information Administration (EIA) data shows U.S. gasoline supply levels sit at 238.7 million bbls, which is 1.6 million bbls more than a year ago. While a healthy supply, the year-over-year surplus has been much greater through the last nine months. This fact combined with low utilization rates, which are down 11%, indicates supply could tighten in weeks ahead especially with refinery consolidations in the northwest and maintenance in the upper Midwest.
However, demand still remains at an extremely low level. AAA believes this factor will impact gas prices, pushing them cheaper in January.
“The recent gas price pump jumps are a bit surprising given December demand numbers are the lowest posted for the month since 1999,” said Jeanette Casselano McGee, AAA spokesperson. “The increases are likely to be short-lived, especially as holiday road travel is expected to see at least a 25% decline.”
Today’s national average is 11 cents more expensive than last month, but 33 cents cheaper than last year.
- The nation’s top 10 largest weekly increases: Wisconsin (+13 cents), Michigan (+12 cents), Indiana (+12 cents), Ohio (+11 cents), Minnesota (+9 cents), Illinois (+9 cents), Missouri (+9 cents), Iowa (+8 cents), Texas (+8 cents) and South Carolina (+8 cents).
- The nation’s top 10 least expensive markets: Mississippi ($1.89), Louisiana ($1.93), Missouri ($1.93), Texas ($1.93), Oklahoma ($1.94), Arkansas ($1.94), Tennessee ($1.97), Alabama ($1.97), South Carolina ($1.99) and Kansas ($2.00).
Oil Market Dynamics
At the close of Friday’s formal trading session, WTI increased by 74 cents to settle at $49.10. The price of domestic crude oil increased over $2.50 per barrel last week. Crude prices rose due to a weak dollar and increasing investment based on market optimism that coronavirus vaccines will help crude oil demand recover in 2021. However, for this week, new demand concerns, as coronavirus infection rates continue to climb and travel restrictions increase, could push crude prices lower.