Commodities Corner: U.S. retail gas prices top $3 a gallon for the first time in over 6 years


U.S. gasoline prices topped $3 a gallon on Wednesday for the first time in about six-and-a-half years — and it wasn’t because of the Colonial Pipeline shutdown, according to GasBuddy.

The $3 price was likely even without the pipeline outage, but it probably “accelerated it” by a few days or weeks, Patrick De Haan, head of petroleum analysis at GasBuddy, told MarketWatch.

The national average price for regular unleaded gas was at $3.02 a gallon as of late Wednesday morning, up 2 cents from Tuesday and up 7.5 cents from a week ago, according to GasBuddy. Average prices haven’t topped $3 since the second half of 2014, data show.

Average U.S. regular gas prices top $3

“While this is not a milestone anyone wants to celebrate, it’s a sign that things are slowly returning to normal,” said De Haan, in a statement Wednesday. “In this case, rising gas prices are a sign of Americans are getting back out in the world — attending baseball games, going to concerts, taking a road trip — basically staying anywhere but at home.”

GasBuddy said it had forecasted that gas prices would climb above the $3 milestone in its 2021 Fuel Outlook report released in January of this year.

The reason behind that forecast holds true today, the travel and navigation app said on Wednesday. “COVID-19 related recovery is pushing things back to normal and leading to rising gasoline demand.”

Demand for the fuel has been strong, even before news of that a ransomware attack led to the shutdown of the Colonial Pipeline, which supplies 45% of the fuel consumed on the U.S. East Coast, late last week.

Read: Gas prices are ticking up after the Colonial Pipeline ransomware attack — here’s where drivers will be most affected

“The pipeline won’t really impact price long term,” De Haan told MarketWatch. “It is a supply event, not a price event because refineries are doing just fine. That’s the distinction.” 

Also see: Here’s what the Colonial Pipeline cyberattack means for energy markets

Over the past four weeks, motor gasoline product supplied, which is a proxy for demand, was up over 41% from the same time a year ago to average 8.9 million barrels a day, the Energy Information Administration said in a weekly report released Wednesday.

Gasoline futures

have climbed nearly 52% year to date to settle at $2.14 a gallon on Tuesday. Futures prices continued to rise Wednesday.

The summer may see “some blockbuster demand for fuel as well, as Americans find it very challenging to travel internationally, leading many to stay in the confines of U.S. borders, boosting some weeks to potentially record gasoline demand,” said De Haan.

Even so, GasBuddy said it does not expect summer gas prices to set records. Instead, they’re likely to settle down to level more similar to 2018, with the national average only “briefly” rising above $3 a gallon and then “falling back under and remaining in the upper $2 to low $3 per gallon range.”

Then again, if any major refinery issues develop in the midst of the summer travel season, gas prices could become “impacted in a large way, especially if the economy continues to see solid recovery and demand for fuels increases,” GasBuddy said.

Also read: What is the Jones Act? And why might waiving it help ease gas ‘supply crunch’?

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