Today’s AAA National Average $2.182

Price as of 9/29/20

Hurricane Laura and Higher Gas Demand Push Pump Prices More Expensive

Hurricane Laura and Higher Gas Demand Push Pump Prices More Expensive

August 27,2020

Since Monday, the national average for a gallon of regular gasoline has increased by four cents to $2.22, which is four cents more than a week and month ago, yet 36 cents lower than a year ago. This jump can be attributed to both an increase in demand and Hurricane Laura.

In the new weekly report from the Energy Information Administration (EIA), gas demand increased from 8.63 million b/d to 9.16 million b/d – one of the highest recorded rates of the year. However, last week’s estimated rate is 739,000 b/d lower than the rate last year at this time. Moreover, total domestic gasoline supplies decreased by 4.6 million bbl last week to 239.2 million bbl, but the current level is 7.2 million bbl higher than the level at this time last year. 

As demand jumps, so did pump prices in anticipation of the disruption to operations at refineries and gasoline distribution along Hurricane Laura’s path. However, lower than usual demand and ample stock levels will contain any significant pump price increases to impacted areas. The rest of the country will see minimal change. As damage is assessed, we will have a better idea of how long motorists in impacted areas will see more expensive prices. 

At the close of Thursday’s formal trading session, WTI decreased by 35 cents to settle at $43.04. Domestic crude prices decreased despite EIA’s weekly report revealing that total domestic inventories decreased by 4.7 million bbl last week, lowering total stocks to 507.8 million bbl. However, total domestic crude inventories are 80 million bbl higher than where they were during this time in August 2019. The higher level will help to stabilize crude prices, as 84% of crude production in the Gulf of Mexico, 299 production platforms, and 11 oil rigs have been shuttered due to Hurricane Laura.