Strong Demand & Rising Oil Costs Push Gas Prices Higher
WASHINGTON, D.C. — With Memorial Day weekend traffic signaling a strong summer travel season, motorists are facing greater pain at the pump.
According to AAA, domestic gasoline demand rose last week in the wake of a robust Memorial Day weekend of travel. Add to that the rising cost of oil, the national average for a gallon of gas surged 25 cents in one week to hit $4.86.
The cost of a barrel of oil is nearing $120, nearly double from last August, as increased oil demand outpaces the tight global supply, the organization said.
"People are still fueling up, despite these high prices," said Andrew Gross, AAA spokesperson. "At some point, drivers may change their daily driving habits or lifestyle due to these high prices, but we are not there yet."
Leading up to the Memorial Day weekend, AAA forecasted that 39.2 million people would travel 50 miles or more from home for three-day weekend. This was an increase of 8.3 percent compared to 2021, bringing travel volumes almost in line with 2017 figures.
Nearly 35 million people planned to travel by car during Memorial Day weekend, up 4.6 percent vs. last year, revealed the AAA holiday forecast.
According to new data from the Energy Information Administration (EIA), total domestic gasoline stocks decreased by 700,000 barrels to 219 million barrels last week. Meanwhile, gasoline demand grew from 8.8 million barrels per day to 8.98 million barrels per day as drivers fueled up for unofficial start of summer.
These supply and demand dynamics have contributed to rising pump prices. Coupled with volatile crude oil prices, pump prices will likely remain elevated as long as demand grows and supply remains tight, according to AAA.
Today's national average for a gallon of gas is $4.86, which is 59 cents more than a month ago, and $1.81 more than a year ago.
The nation's top 10 largest weekly increases occurred in Michigan (+45 cents per gallon), Illinois (+41 cents), Indiana (+41 cents), Wisconsin (+39 cents), Ohio (+38 cents), Nebraska +(37 cents), Kentucky +(36 cents), Colorado (+35 cents), Minnesota (+34 cents) and Texas (+32 cents).
The nation's top 10 most expensive markets are California ($6.34 per gallon), Nevada ($5.49), Hawaii ($5.47), Oregon ($5.41), Washington ($5.40), Illinois ($5.40), Alaska ($5.37), Washington, D.C. ($5.06) and Michigan ($5.05).
At the close of the formal trading session on June 3, West Texas Intermediate increased by $2 to settle at $118.87. Crude prices rose last week after OPEC+ announced it would increase monthly production to 648,000 barrels per day in July and August instead of 400,000 per day as previously planned.
However, the market is still concerned that supply could remain tight as the European Union works to implement a 90-percent ban on Russian oil imports by the end of this year, AAA explained.
Additionally, prices were boosted after EIA reported that total domestic stocks decreased by 5.1 million barrels to 414.7 million barrels. The current storage level is approximately 13.5 percent lower than a year ago, contributing to rising crude prices. For this week, crude prices could rise again if EIA's next report shows another decrease in total domestic stocks, the organization added.