Today’s AAA National Average $3.315

Price as of 12/9/22

Gas Demand Spikes, Contributing to Rising Pump Prices

Gas Demand Spikes, Contributing to Rising Pump Prices

October 06,2022

Since Monday, the national average for a gallon of regular gasoline has risen by seven cents to $3.86. According to new data from the Energy Information Administration, gas demand increased nationally from 8.83 million b/d to 9.47 million b/d last week, and total domestic gasoline stocks decreased significantly by 4.7 million bbl to 207.5 million bbl. High gasoline demand, amid tight supply, has led to higher pump prices nationwide.

Pump prices on the West Coast have increased due to ongoing refinery maintenance at roughly six refineries, severely limiting the region’s supply. However, refinery restarts and California officials allowing less expensive winter-blend gasoline to be sold a month ahead of schedule should offer drivers relief at the pump in the coming days. For the upper Midwest, pump prices have spiked as a deadly refinery fire in Toledo, OH has tightened supply in the region. According to some reports, the 160,000 barrel-per-day BP-Husky Toledo refinery may be offline until December due to an ongoing investigation into the blaze.

At the close of Wednesday’s formal trading session, WTI increased by $1.24 to settle at $87.76. Crude prices have increased this week after the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+, announced intentions to cut crude production by 2 million b/d this fall. The exact impact of the production cut on crude prices and domestic gas prices will depend on how the market interprets the reduction. If it appears that the production reduction is already occurring as a result of OPEC+ members being unable to meet current production quotas, the pricing impact is likely to be short-lived because the market may have already factored the lower production amount into pricing expectations. Moreover, for weeks, the market has been concerned that a recession could lead to lower crude demand and prices. If crude demand does decline, drivers may not see as large of a pricing impact. Additionally, the US is entering the fall and winter driving season when gasoline demand typically declines as a result of colder, inclement weather reducing trips. If that trend holds true this year, drivers could see prices decline in the weeks ahead.

Largest Weekly Increases

  • Since last Thursday, these 10 states have seen the largest increases in their averages: Alaska (+38 cents), Illinois (+25 cents), Ohio (+25 cents), California (+24 cents), Nevada (+22 cents), Oregon (+22 cents), Indiana (+21 cents), Washington (+19 cents), Arizona (+17 cents) and Michigan (+17 cents).