U.S. gasoline prices heading into Labor Day weekend are the lowest since 2004
The U.S. average regular gasoline retail price as of the Monday before Labor Day weekend is $2.22 per gallon (gal) this year, the lowest level for this time of year since 2004, according to the U.S. Energy Information Administration’s (EIA) weekly gasoline price series. U.S. gasoline prices are relatively low because of continued low demand for gasoline since mid-March, when travel demand fell because of efforts to limit the spread of coronavirus.
During the peak of COVID-19 induced lockdowns, the U.S. weekly average regular gasoline retail price fell to as low as $1.77/gal on April 27. The average weekly U.S. retail gasoline price increased to more than $2.00/gal by early June and has remained relatively flat through July and August, but prices were still approximately 18% lower than gasoline prices at the same time last year.
Note: June and July monthly averages are based on data from the Weekly Petroleum Status Report and weighted based on the number of days in the month. The August monthly average includes data through August 28.
Monthly motor gasoline consumption in the United States, measured as product supplied, reached a low of 5.85 million barrels per day (b/d) during April 2020, the lowest level since 1974. Efforts to slow the spread of COVID-19 were most widespread in April, when total U.S. gasoline product supplied was down by about 37% from the previous April.
Gasoline consumption increased to approximately 90% of levels seen last year by the end of June and have remained at about that level through the week ending August 28. Despite the increase from recent lows, gasoline demand remains 9% lower than the five-year (2015–19) average.
U.S. gasoline prices vary regionally, reflecting local supply and demand conditions, different fuel specifications required by state laws, and taxes. Regional gasoline prices are usually the highest in the West Coast, as a result of the region’s limited interconnections with other major refining centers (including the Gulf Coast), tight local supply and demand conditions, and requirements for gasoline specifications that are more costly to manufacture. West Coast prices from July through August were down 15% relative to a year ago, averaging $2.82/gal in 2020.
The Gulf Coast contained 53% of the country’s total refining capacity as of January 2020, and it produces more gasoline than it consumes. As a result, the price of gasoline in the Gulf Coast is often the lowest in the United States.
Despite several unplanned refinery outages because of Hurricane Laura, high gasoline inventories on the Gulf Coast continued to put downward pressure on regional retail prices, which had a weekly increase of 2.3 cents per gallon as of August 31 (compared with a national increase of 4.0 cents per gallon). Gasoline prices on the Gulf Coast from July through August were down 21% from 2019, averaging $1.86/gal.
On the East Coast, the largest gasoline demand market of the five regions in EIA’s gasoline price data, retail gasoline prices were relatively flat in July and August, down 19% from a year ago, averaging $2.10/gal. Midwest prices during the same period were down 20% from a year ago, averaging $2.09/gal. Rocky Mountain prices were down 14% against a year ago, averaging $2.34/gal.
To learn more about this topic, read the full article in the September 2, 2020, edition of This Week in Petroleum.
Principal contributor: Kevin Hack