Though crude oil has experienced wild swings, the retail price for gasoline has barely moved over the past month.
Unwavering Demand Seems To Be Keeping Prices High At The Gas Pump
While some cooling off is expected, demand for gasoline in the U.S. remains steady enough for the time being to prevent prices dropping, analysts told Zenger.
Travel club AAA estimated the average national retail price at $3.18 for a gallon of regular unleaded gasoline on Tuesday, a figure relatively unchanged from a week prior.
Crude oil prices, which account for the bulk of prices at the gas pump, have been on a downward trajectory this month, with the price of Brent crude oil down nearly 7 percent.
But gas prices have not followed suit.
Denton Cinquegrana, the chief oil analyst at the Oil Price Information Service, said crude oil prices have been remarkably volatile. But he noted that’s not been the case for gas.
“Want to know what the most common gasoline price in the U.S. is? $2.99 per gallon. Want to know what the most common price in the U.S. has been since late June? $2.99 per gallon,” he said. “Prices are high, but are really remarkably stable.”
AAA’s national average is skewed by the West Coast, where prices are above $4 per gallon. Several states along the US Gulf Coast, meanwhile, are posting prices around $2.80.
With the stability that Cinquegrana referenced, consumers may be acclimated to higher prices at the pump. The latest reading from the federal government on the total amount of refined petroleum products supplied to the market, including gasoline, has been steady for weeks. That data is a loose proxy for demand and remains above pre-pandemic levels.
Matthew Kohlman, an associate director for refined products pricing at S&P Global Platts, told Zenger from Houston that there might be a bit of a floor under commodity prices in general because of that continued strength in demand.
“Strong gasoline demand and profit margins aren’t only in the U.S., they’re global — seen also in Europe, which is also on holiday season, as well as parts of Asia,” Kohlman said.
Still, the period between the July 4 long weekend and September’s Memorial Day usually sees a lull in demand. Meanwhile, the rapid spread of the Delta variant of COVID-19 could also have a negative impact demand if social restrictions are put back in place.
Patrick DeHaan, the senior petroleum analyst at GasBuddy, told Zenger from Chicago that there’s “definitely” room for prices to move lower.
“Peak summer demand is over,” DeHaan said.
A federal report published Tuesday predicted the national average retail price for a gallon of gasoline will be around $2.88 by the fourth quarter of the year.
Edited by Bryan Wilkes and Alex Willemyns