Demand for gas is down as the summer driving season kicks off, likely due to drivers bypassing high prices at the pump, according to recent data from the Energy Information Administration (EIA).
Gas prices set yet another record Wednesday, when the national average for a gallon rose 5 cents to $4.67. Motorists are reacting to the higher prices by steering clear of the gas station, driving deliveries of refined gasoline to the market (a proxy for demand) down to 8.85 million barrels a day, 6% below pre-pandemic 2019 levels, according to EIA data. As the chart below shows, that’s below even the post-pandemic 2021 recovery period, when drivers were starting to return to the road following lockdowns.
Due to an assortment of pressures along the supply chain, gas prices are 53% higher now than they were a year ago. Not only has Russia’s invasion of Ukraine created disruptions in the crude oil supplies that are used to make gasoline, but U.S. refining capacity has struggled to return to pre-pandemic production levels. Indications that drivers are passing up the pump include reports of weak gas demand over Memorial Day weekend (the traditional start of the summer driving season) from Patrick De Haan, head of petroleum analysis for gas price website GasBuddy.
“We’re in the beginning of driving season, but gasoline demand is not following the classic pattern of a seasonal surge,” analyst Wolf Richter wrote on his finance blog, Wolf Street.
Have a question, comment, or story to share? You can reach Terry at firstname.lastname@example.org.
Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!