For the first holiday of the summer season, gas prices are expected to be the highest in seven years and prices could stay high all summer, as more people will be traveling due to COVID restrictions being lifted.
According to AAA, the current average price for a gallon of unleaded gasoline is $3.04 per gallon, 16 cents more than a month ago and $1.08 per gallon higher than last year. The motor club federation expects 37 million Americans to travel this weekend, a 60% increase over last year when the economy was still shut down.
Gas prices jumped earlier this month, particularly in the Southeast, after the Colonial Pipeline went offline for six days after a ransomware attack, CNBC reports. In some Southern states, gas prices jumped more than 20 cents per gallon as panicked drivers filled their tanks and shortages shut down stations.
Gasoline demand last week reached 9.5 million barrels a day, the highest since March 13, 2020, which was just when the economy began to shut down, according to the latest Energy Information Administration data.
Patrick De Haan, head of petroleum analysis at GasBuddy said, “There’s part of me that feels like the market has a potential to overheat this summer, just because people are stuck here.” De Haan expects more road trips since international travel is still difficult. “Everyone wants to get out. If there’s any hiccup in the system this summer, it’s going to be hard to fuel up.”
De Haan said more of a concern is that prices will jump this summer if there are any refinery outages or hurricanes disrupting the flow of crude or refined oil. “Usually when prices go up 50 cents, people say they’ll just stay home, but not this year, with the pent-up demand. If there’s any kinks in the system, it could get ugly.” De Haan said a GasBuddy survey showed that 53% of Americans said gas prices are irrelevant to them, and 57% expect to take at least one road trip, up from 31%.
De Haan and other experts say the national average for gasoline could continue to dip as prices fall in the areas hit by the pipeline outage. The Colonial Pipeline takes gasoline from Texas, across the South and North to New Jersey.
Gasoline prices usually peak early in the summer driving season, but experts say it’s possible there will not be a peak before the Fourth of July. Tom Kloza, global head of energy analysis at OPIS said, “I do think we’ll see a June swoon,” but he said he expects gasoline prices to stay around $3 per gallon. Kloza said there is a shortage of tank truck drivers that could make gasoline deliveries more difficult in areas that are far from storage terminals.
Kloza doesn’t expect prices to flare up to the $3.50 per gallon that was common in 2008 and between 2011 and 2014. He expects prices to be lower by the Fourth of July, but any issue could take them higher.