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07/12/2022

Fuel Demand Ticks Up as Prices Continue to Dip

The new national average of $4.67 is 32 cents less than one month ago.

NATIONAL REPORT — The national average for a gallon of gas took a dip despite a rise in demand, which was likely the result of robust July 4th holiday travel.

Pump prices fell another 12 cents since last week to $4.67. The new national average is 32 cents less than one month ago and $1.53 more than a year ago, AAA reported.

"Usually, more people buying gas would lead to higher pump prices," said Andrew Gross, AAA spokesperson. "But the price for oil, the main ingredient in gasoline, has fallen and is hovering around $100 a barrel. Less expensive oil usually means less expensive gas."

According to new data from the Energy Information Administration (EIA), gas demand increased from 8.92 million barrels per day to 9.41 million barrels per day ahead of the Fourth of July holiday, while total domestic gas stocks decreased by 2.5 million barrels. Typically, these supply/demand trends would put upward pressure on pump prices; however, falling oil prices have contributed to lower pump prices.

The nation's top 10 largest weekly decreases occurred in Texas (18 cents per gallon), Ohio (17 cents), Illinois (17 cents), California (16 cents), Wisconsin (15 cents), Indiana (15 cents), Kentucky (15 cents), Alabama (15 cents), Virginia (14 cents), and Florida (14 cents).

The nation's top 10 least expensive markets are South Carolina ($4.18), Georgia ($4.18), Mississippi ($4.18), Louisiana ($4.22), Texas ($4.22), Alabama ($4.25), Arkansas ($4.26), Tennessee ($4.28), North Carolina ($4.31), and Kentucky ($4.37).

Texas, Illinois, Indiana, Ohio, Florida, and Virginia were also among the top 10 states where the largest weekly decreases took place last week, while this week's top 10 least expensive markets remains relatively unchanged compared to one week ago.

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At the close of the formal trading session on July 8, West Texas Intermediate increased by $2.06 to $104.79. Although the price of crude oil rose at the end of the week due to increased market optimism as markets rebounded, the price was still down nearly $4 per barrel from the previous week.

For this week, crude prices could continue to face strong headwinds if the market remains concerned that a potential recession will reduce demand for crude. If demand declines, crude prices will likely follow suit, according to AAA.

Additionally, EIA reported that total domestic crude stocks increased by 8.2 million barrels to 423.8 million barrels, which is nearly 22 million barrels lower than the storage level one year ago.

It was just one month ago when the national gas price average hit a new all-time high of $5.01 — the highest recorded national average price of gas since AAA began collecting pricing data in 2000, according to the association.

As government officials continue to seek ways to give drivers relief, several states have enacted temporary measures. Last month, New York State temporarily suspended its excise tax and state sales tax on gasoline and diesel, reducing the tax burden on a gallon of motor fuel by 16 cents.