US gas prices end the year near a pandemic peak

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Not this year.

Gas prices are now close to their highest point since the pandemic hit orders in March. The average price of a gallon of regular gas rose to $ 2.25 on Thursday, according to AAA, just a penny from last month’s nine-month highs, but up 13 cents from a month ago.

December and January usually have the lowest fuel consumption of the year, short daylight hours and bad weather discourage people from driving. And that suppresses gasoline prices in the winter. But recent approvals for Covid vaccines have raised hopes of a return to a more normal journey and more normal economic activity next year, boosting the future of oil and gasoline.

“There is tremendous confidence in the markets that at some point in 2021 demand will return,” said Tom Kloza, chief oil market analyst for the Oil Price Information Service, which tracks gas prices at 140,000 US stations. for AAA.

Low petrol and, in particular, aircraft fuel prices at the beginning of the year also led refineries to reduce their refining capacity in North America by around 1.2 million barrels per day. This reduction in capacity has also helped to raise average petrol prices.

The low point in gas prices this year came in late April, when prices fell to $ 1.77 a gallon as large-scale home orders designed to fight the pandemic caused a collapse. oil prices. Crude oil prices fell sharply in April in the face of that drop in demand. The national average gasoline price did not rise back above $ 2 a gallon until early June and has risen slowly since then.

The average price is still down 13% from the $ 2.53 per gallon average of a year ago. But then prices went down, not up.

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

This week's oil price rally is being built on solid ground

Even with the recent increase in the average price, just over a quarter of gas stations nationwide sell gasoline for less than $ 2 a gallon.

Kloza believes that markets could move slightly short of where demand will be in 2021. He believes that changing the number of people working from home and increasing the use of electric vehicles means that US oil consumption will never reach the average 9.3 million barrels reached from 2016 to 2019.

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