Lower Gas Demand in 2020 Fuels Lowest Gas Prices in Four Years
WASHINGTON, D.C. — Last year's prices at the pump hit their lowest annual average since 2016.
According to the U.S. Energy Information Administration (EIA), regular retail gasoline prices averaged $2.17 per gallon in the United States in 2020 — 44 cents per gallon, or 17 percent, lower than in 2019.
Gas prices started 2020 at more than $2.50 per gallon; however, the COVID-19 pandemic drove widespread reductions in passenger travel and gasoline demand, contributing to lower gasoline prices across the U.S., EIA explained.
By mid-March, as a national emergency was declared in response to the health crisis, prices averaged $2.38 per gallon. They continued to fall for several consecutive weeks before reaching $1.77 per gallon on April 27, the lowest average price since early 2016, according to the EIA's Gasoline and Diesel Fuel Update.
At the same time, the Bureau of Transportation Statistics data showed vehicle travel fell in April to its lowest month level on record. The data series dates back to 2000.
Vehicle travel and gasoline demand (measured as product supplied) began to tick up in May, relative to April levels. From May through the end of the summer, U.S. gasoline inventories remained high because of sustained lower demand, even as refiners reduced gasoline production because of lower margins, according to EIA.
This stood out from past summers, when gas prices tend to be the highest — coinciding with increased demand. However, in 2020, U.S. gasoline prices were highest at the beginning of the year. Of the 10 cities surveyed in EIAs Gasoline and Diesel Fuel Update, eight cities registered their highest gasoline prices for the year on Jan. 6, and the remaining two cities (Chicago and Houston) registered their annual highs the following week on Jan. 13.
Gasoline prices in Boston, Chicago, Cleveland and San Francisco reached their annual lows on April 27, and gasoline prices in Denver, Los Angeles, New York and Seattle reached their annual lows the following week on May 4. The lowest gasoline prices of the year in the remaining two cities (Houston and Miami) occurred two weeks later, on May 18, EIA reported.