Gas prices have soared so high that the US is now seeing demand destruction ahead of the summer driving season
[Business Insider]
- The average gallon of gas in the US hit a high of $4.59 Tuesday, about 51% higher than a year ago.
- Demand on a four-week rolling basis was its lowest for this time of year since 2013, excluding 2020.
- Costs and a demand slowdown could dash hopes for a driving season resembling pre-coronavirus times.
Pain at the pump has gotten so bad that demand for gasoline is dropping just as the summer driving season is about to begin.
Demand on a four-week rolling basis has hit its lowest level during this time of year since 2013, excluding the pandemic-outbreak period in 2020, according to data from the Energy Information Administration compiled by Bloomberg. Compared with year-ago levels, demand is down roughly 5%.
Prices at gas stations across the US have hit record after record over the past two weeks, dashing some hopes for a driving season that approaches pre-COVID-19 levels, AAA previously predicted.
The average gallon of gas in the US hit $4.59 on Tuesday, about 51% higher than a year ago, according to AAA data. Regular gas prices have never hit this level. And in California, AAA data showed, prices can be over $6.
The demand destruction stemming from the high gas prices could alter earlier forecasts for prices to climb even higher.
A JPMorgan note on May 18 said the average US gas price could surpass $6 a gallon this summer as driving season gets fully underway.
“US retail price could surge another 37% by August to a $6.20/gal national average,” analysts led by Natasha Kaneva wrote.
By Phil Rosen