US gasoline prices close the year close to a high in the pandemic era

US gasoline prices close the year close to a high in the pandemic era

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Not this year.

Gas prices are now close to their peak since the pandemic sparked requests to stay home in March. The average price of a gallon of regular gasoline was $ 2.25 on Thursday, according to the AAA, just a penny from the nine-month high reached last weekend, but 13 cents above the previous month. .

Typically, December and January have one of the lowest gasoline consumptions of the year, as the few hours of daylight and bad weather discourage people from driving. And that suppresses gasoline prices in the winter. But recent Covid vaccine approvals have raised hopes for a return to more normal travel and economic activity next year, increasing oil and gasoline futures.

“There is tremendous confidence in the markets that sometime in 2021 this demand will recover,” said Tom Kloza, chief oil market analyst at the Oil Price Information Service, which monitors gas prices at 140,000 American AAA stations.

Low prices for gasoline, and especially jet fuel, earlier this year also prompted refiners to cut North America’s refining capacity by about 1.2 million barrels a day. This capacity cut also helped to raise average gasoline prices.

The lowest point for gas prices this year came at the end of April, when prices hit rock bottom at $ 1.77 a gallon, as widespread requests to stay at home aimed at fighting the pandemic caused a collapse in oil prices. Oil prices were briefly negative in April, due to falling demand. The national average price of gasoline did not rise above $ 2 a gallon until the beginning of June and has been rising slowly since then.

The average price is still 13% below the average of $ 2.53 a gallon of one year ago. But then prices started to fall, not to rise.

The $ 267 billion that drivers spent on gasoline this year was the lowest since 2004, and about $ 100 billion less than in 2019. And the average price of $ 2.18 for the year is the lowest since 2016, and the second lowest annual average over the past 16 years.

This week's high oil price was built on unstable ground

Even with the recent rise in average prices, just over a quarter of gas stations across the country are selling gas for less than $ 2 a gallon.

Kloza believes that markets may be a little ahead of where demand will be in 2021. He believes that changing more people working from home and increasing the use of electric vehicles means that oil consumption in the US will never reach average of 9.3 million barrels. reached from 2016 to 2019.

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