Since Monday, the national average price for a gallon of regular gasoline has increased by four cents to $3.36, largely as a result of people returning to travel after Covid-19 lockdowns without a supply chain in place to make op for lagging production.
U.S. regular retail gasoline prices averaged $2.17 per gallon in 2020, 44 cents per gallon (17%) lower than in 2019 and the lowest annual average since 2016.
Those price drops reflected the decline in demand that accompanied the onset of the pandemic before fuel supplies dried up.
According to new data from the Energy Information Administration (EIA), total domestic gasoline stocks decreased by 5.4 million barrels to 217.7 million barrels last week.
However, gasoline demand increased from 9.19 million barrels per day to 9.63 million barrels per day.
With the US economy recovering from the depths of the pandemic, demand for gas has gone up, but supply is tight.
Higher demand coupled with a decline in stocks, alongside elevated crude prices, has put upward market pressure on pump prices.
Gas prices have surged again in New Jersey with double-digit increases in the Garden State at a time of year that usually sees decreases due to a drop in demand.
New Jersey averaged $3.440 for regular, $3.778 for mid-grade, $3.963 for premium and $3.679 for diesel. The highest recorded average price for unleaded regular was $3.995 on July 8, 2008.
Pump prices will likely rise as long as crude prices remain high — above $80 per barrel.
At the close of Thursday’s formal trading session, West Texas Intermediate (WTI) oil decreased by 92 cents to settle at $82.50.
Although crude prices took a slight step back today due to weakness in the U.S. equity markets, prices increased after EIA’s weekly report revealed that total domestic crude inventories decreased slightly to 426.5 million barrels.
The current storage level is approximately 13 percent lower than the level at this same time last year.
Given supply concerns, the market continues to push prices higher because of tight supply.