Soaring Gas Prices Cause Demand to Fall to Nine-Year Low
May 25, 2022
Gasoline prices in the U.S. have gotten so high that consumer demand is eroding in the run-up to the summer driving season.
Demand on a four-week rolling basis has fallen to its lowest level for this time of year since 2013, not counting 2020 when the economy was largely shut down due to the pandemic, according to data from the Energy Information Administration (EIA) compiled by Bloomberg. Compared with the same period last year, demand is down roughly 5%.
The pullback in demand casts doubts on projections made by AAA earlier in the month that this summer would see travel volumes approach pre-pandemic levels. Last month, the EIA noted that high prices could limit some recreational travel over the summer, but the group still expected consumption this summer to be higher than last year.
U.S. gas prices have hit new records nearly every day for the past two weeks, climbing to a national average of $4.59 per gallon this week. That is 51% higher than during the same week last year.
Last week, JP Morgan analysts said the average U.S. gas price could climb another 37% by August, climbing as high as $6.20 per gallon.