What’s pushing gas price increases?
Crude oil and pump prices will soon be more expensive than the highest price of 2020 despite low demand.
At the end of last week, crude was priced at $59.47/bbl. That’s just under $4/bbl less than last year’s most expensive price of $63.27/bbl (seen on Jan. 6, 2020).
Since the end of November, we’ve seen the price of crude increase as much as $5/bbl a week, meaning we could see 2021 crude oil prices top 2020 as early as this week.
With the price of crude consistently increasing, so have gas prices because crude oil accounts for more than 50 percent of the price at the pump. Nearly 40 state gas price averages are already more than last year, with half of those averages seeing double-digit increases.
“Crude, not demand, has been the main factor driving gas price increases this year,” said Morgan Dean, AAA spokesperson. “Today’s national average is $2.51, which is just seven cents less than the most expensive national gas price average in 2020.”
Today’s Virginia average is $2.41, up eight cents over a week ago, twelve cents over a month ago and 21 cents over this day last year.
Demand has averaged 7.7 million b/d since January. The last time it measured below 8 million b/d during the first six weeks of the year was 2001.
Just how expensive gas will get this year is largely dependent on crude price and demand. The price of crude is still $10–$12/bbl less than when the national average was last near $3/gallon in 2018.
In order for prices to be that expensive again this spring or summer, AAA believes that a major spike in demand, returning to normal peak driving season levels, and crude sustaining at very high prices will be required.