money Gas prices hit pre-pandemic levels
American motorists are again paying pre-pandemic prices at the pumps — and then some.
The average price for regular unleaded gasoline in the U.S. was $2.456 a gallon as of Monday, according to GasBuddy, marking an increase of 1.8 cents compared with the average price of $2.438 a gallon one year ago.
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“Seasonal norms are by the wayside. This time of year we typically see demand weakening because of the cold weather,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “But...Americans continue to get more comfortable with getting out there more and more. Instead of seeing a strong seasonal downturn in demand, we're seeing a very minimal drop in demand.”
Demand has gone up since Christmas, De Haan said, only to stall in the last two weeks which is likely due to winter weather and the polar vortex. The transition from winter to spring means that prices will continue to creep up and De Haan predicted that gas prices will jump by “a few cents a gallon or more every week,” with some states exceeding that pace.
“I do think that trajectory will remain to the upside for at least the next couple of weeks,” he said. “So long as COVID continues to improve, that will likely spur demand higher.”
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The evolution of gas prices in 2020 was immune to temporal changes. In late February, just before the onset of the coronavirus panic, average prices were just under $2.50 a gallon and then started plummeting, eventually falling to $1 .74 on April 26.
From late April through late June, prices incrementally rose and the national average crossed $2.50 a gallon in July, where it roughly remained through October.
“There was a pretty broad recovery as America got back out on the road, and then prices really were in limbo up until Halloween,” he said, referencing the second wave of cases and lockdown measures that came last fall.
Since November that saw a presidential election, vaccination announcements, and cuts to crude oil production, prices have increased as Americans’ enthusiasm to stay on the road remained.
“Ever since mid-November, there's been this broad optimism surrounding COVID-19 vaccines,” he said. “Prices have seen a very strong rally since mid-December. We've been on kind of a tear.”
De Haan said the national average could “easily” rise another 10 cents to 25 cents a gallon by summer, and he won’t rule out gas hitting $3 a gallon.
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If the Organization of the Petroleum Exporting Countries — otherwise known as OPEC — continues to hold its grip on production and demand outpaces supply, that could be problematic.
“The only golden rule when it comes to gas prices is that nothing's impossible,” he said, regarding $3 a gallon. But higher pump prices signal recovery from the pandemic, he said, adding “I think everyone would rather pay a little bit more at the pump and be out of this nightmare.”
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
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