Gas Prices Refuse to Drop Because of High Demand

Nov 22, 2017

Weather, both bad and good, has played a huge role in gasoline prices in the second half of 2017.

Gas prices spiked after Hurricane Harvey crashed into Texas at the end of August, not only notoriously flooding the streets of Houston but also temporarily shutting down several refineries.

According to AAA, the average price for a gallon of unleaded regular in the U.S. was $2.33 per gallon on Aug. 21. By Sept. 5 AAA was reporting that average had jumped to $2.65 a gallon.

“Overall, gas prices are pennies away from topping the highest price ($2.67, Aug. 15-18, 2015) Americans have paid for a gallon of gas in more than two years,” said Jeanette Casselano, AAA director of public relations, at the time.

That two-year high was matched on Sept. 11 when AAA pegged the country’s average price per gallon of unleaded regular at $2.67. But prices started to fall the next week, with the average dropping to $2.62 by Sept. 18. And Casseleno said prices would continue to drop “as the regions affected by Irma and Harvey resume normal operations.” She was right – the average price per gallon was $2.57 on Sept. 25. After that, the decrease leveled off.

On Monday AAA reported the average price for a gallon of regular unleaded across the country was $2.54 a gallon. That’s closer to the $2.67 of Sept. 11 than the $2.33 of Aug. 21. Why no further price drop considering the Gulf Coast refineries were back on line?

“The price volatility can be attributed to a new trend that has emerged during October in the last few years, which is unexpected steady demand for gasoline after the end of the summer driving season,” Casselano explained.

The cool, wet weather of late August had given way to pleasant, summer-like weather, especially in the northeast. So motorists kept making weekend getaways, sucking up gas in the process and driving up demand.

“October has seen strong demand numbers lately, in part, due to consumers taking advantage of the unseasonably warm weather rather than spending time indoors,” Casselano said. “As consumers fill up their tanks more frequently, we are seeing supply levels tighten and gas prices increase.”

Indeed, AAA said the October gasoline demand was the highest since 2006.

On Nov. 13 the price of a gallon of gas hit $2.56, up 9 cents in two weeks. Strong demand was the reason, with the Energy Information Administration reporting total gasoline inventories falling by 3.3 million barrels in its latest report.

“Compared to the first half of November last year, gas prices this November are on average 39 cents more expensive,” said Casselano. “However, while November gas prices have come in like a lion, AAA expects them to go out like a lamb.”

That’s a bold prediction considering AAA is predicting a busy Thanksgiving on America’s highways: “Nearly 46 million Americans will travel more than 50 miles away from their home by car this holiday.”

That will make it, according to AAA statistics, the “most heavily trafficked holiday in a dozen years.”  —R.M.

 

 

 

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