Gas Demand Remains Low Despite Falling Prices
NATIONAL REPORT — Despite steadily falling gas prices during the peak of the summer driving season, fuel demand remains low, signaling consumers are changing their driving habits to cope with higher pump prices.
Meanwhile, the cost of oil has edged lower on fears of economic slowdowns elsewhere around the globe. Because of these factors, the national average for a gallon of gas fell to $4.05, AAA reported.
"Oil is the primary ingredient in gasoline, so less expensive oil is helpful in taming pump prices," said Andrew Gross, AAA spokesperson. "Couple that with fewer drivers fueling up, and you have a recipe for gas prices to keep easing. It's possible that the national average will fall below $4 this week."
According to new data from the Energy Information Administration (EIA), gas demand dropped from 9.25 million barrels per day to 8.54 million barrels per day last week. The rate is 1.24 million barrels per day lower than last year and is in line with the need at the end of July 2020, when COVID-19 restrictions were in place and fewer drivers hit the road.
Additionally, total domestic gasoline supply rose slightly by 200,000 barrels to 225.3 million barrels. If gas demand remains low and the supply continues to increase alongside falling oil prices, drivers will likely continue to see pump prices drop.
Today's national average of $4.05 is 67 cents less than a month ago and 87 cents more than a year ago.
The nation's top 10 largest weekly decreases were in Washington, D.C. (28 cents), Colorado (23 cents), Arizona (21 cents), Illinois (21 cents), Indiana (21 cents), Iowa (20 cents), Ohio (20 cents), Michigan (19 cents), Missouri (18 cents) and Minnesota (18 cents).
The nation's top 10 least expensive markets are Texas ($3.55), South Carolina ($3.59), Oklahoma ($3.60), Arkansas ($3.60), Georgia ($3.61), Tennessee ($3.62), Mississippi ($3.62), Alabama ($3.64), Kansas ($3.66) and Iowa ($3.66).
At the close of the formal trading session on Aug. 5, West Texas Intermediate increased by 47 cents to settle at $89.01. Although crude prices made slight gains on due to a strong U.S. jobs report for July, they saw significant declines throughout the week as a result of continuing market concern that demand will decline if economic growth stalls or reverses course, AAA reported.
Prices have not been this low since mid-February, before Russia invaded Ukraine. Additionally, EIA reported that total domestic crude supply increased by 4.5 million barrels to 426.6 million barrels. The sharp inventory increase, during the usually high-demand summer driving season, signals low demand could continue pushing prices lower.
For this week, crude prices could continue to decline if demand concerns persist.
Consumers' Changing Driving Habits
New survey data from AAA finds that drivers are making significant changes to cope with record pump prices. Almost two-thirds (64 percent) of U.S. adults have changed their driving habits or lifestyle since March, with 23 percent making "major changes."
Drivers' top three changes to offset high gas prices are driving less, combining errands, and reducing shopping or dining out.
In March, AAA conducted a survey examining the pump prices Americans would view as too expensive. At that time, more than half (59 percent) of respondents said they would change their driving habits or lifestyle if the cost of gas rose to $4 per gallon. If gas were to reach $5, which it did in June, three-quarters said they would need to adjust their lifestyle to offset the spike at the pump.
At that time, among Americans who said they would make changes in response to higher gas prices, a majority (80 percent) said they would opt to drive less.