Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
What does this mean for gas prices? Well, we told you that America voted for higher gasoline prices when they voted for Joe Biden and he is making good on that promise. The summer driving season price jumps are happening as U.S. supply is below average and gas demand is getting ready to skyrocket. AAA reported yesterday that, “At the start of May, the national gas price average is $2.90, which is three cents more than a month ago. Pump prices in April saw minimal variability compared to March, which increased 15 cents from start to finish. Stable crude oil prices amid fluctuating demand helped keep the national average price jumps nominal last month. “While April saw minimal fluctuation, May is likely to see much larger increases alongside demand spikes, especially closer to Memorial Day weekend,” said Jeanette McGee, AAA spokesperson. “Compared to May 2019, U.S. gasoline demand is down only 4% and gas prices are on average just two cents more.”
On the week, the national average increased by two cents. Ten states saw averages increase between five and eight cents, but most states saw increases of one to three cents. The pump price changes come amid flux in supply and demand. For the week ending April 23, the Energy Information Administration reported gasoline stocks saw a small 100,000 bbl build to reach the 135 million bbl mark. That is the highest supply rate since the end of February and an 8.3 million bbl surplus compared to the same time two years ago. While supply increased, demand saw a decrease of 3% to 8.87 million b/d.
Media reports surfaced that a shortage of fuel tank truck drivers may impact gasoline availability this summer. Grady Trimble and myself on Fox Business covered this yesterday. As gasoline demand increases, gas stations are working to adjust delivery schedules to keep pace. However, deliveries may be delayed in a small number of markets this summer causing select stations to see low to no fuel at some pumps for short periods, one or two days. “With road trips expected to be popular this summer, some summer travel destinations, like beaches or mountains, may see some pumps affected. It is important to understand this is not a market-wide impact. Gas can be found at other stations within a market,” said McGee. “The U.S. is not looking at a gas supply shortage; there is ample gasoline supply across the country. It is just a matter of more frequent deliveries to stations to meet demand.” In markets where this happened last month, it was contained within a brand/chain at a select number of pumps.
As a rule of thumb in general, AAA recommends that motorists consider filling up when their fuel level hits a quarter of a tank. The nation’s top 10 largest weekly changes: Indiana (+8 cents), Illinois (+8 cents), Washington (+6 cents), Oregon (+6 cents), Alaska (+5 cents), California (+5 cents), Utah (+5 cents), North Carolina (+5 cents), Ohio (−5 cents) and Hawaii (+4 cents). The nation’s top 10 least expensive markets: Mississippi ($2.57), Texas ($2.57), South Carolina ($2.60), Louisiana ($2.60), Alabama ($2.63), Oklahoma ($2.66), Missouri ($2.66), North Carolina ($2.67), Arkansas ($2.67) and Tennessee ($2.69).
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