As Gas Demand Increases, So Do Prices — 25% Higher Than Last Year

Close up of a beautiful woman refueling the gas tank at fuel pump.
BraunS / Getty Images

With more Americans returning to offices and planning over-the-road travel, gas prices are spiking. According to data from the Automobile Association of America, the average gallon of gas in the U.S. costs $2.88, an increase of 74 cents compared to the same period last year.

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Gas Prices Surge for Over 10 Straight Weeks on Optimism of Pandemic’s End

As mass vaccination events continue, offices are making reopening plans while travelers are making long-awaited vacation plans. According to the “American Express Travel: Global Trends Report,” over half of respondents said they were willing to make travel plans, even if they would have to cancel them later.

Many of those plans will involve road trips. A survey sponsored by Harvest Hosts suggests the majority of Americans would feel safe traveling on the road, and 53% of respondents said they would travel exclusively using an RV. With demand spiking, the average price for gas is spiking upwards to pre-pandemic costs.

The dramatic increase isn’t just because more people are filling up their cars and trucks. Data from fuel-price tracking website GasBuddy shows that fuel refineries are not catching up to the sudden increase in demand. As a result, low supply and high demand drives the average price upward.

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“The recovery in the last few weeks has been astounding…and perhaps will lead to continued price increases due to the continued imbalance between supply and demand,” Patrick De Haan, head of petroleum analysis for GasBuddy, said in a blog. “It’s no longer a question of if we’ll see gasoline demand return to near normal this year but when, and will oil producers rise to the occasion and be able to quickly ramp up output?”

Gas Price Increases Create Implications for Air and Road Travel

As we head into the summer months, indicators suggest the price of fuel will not only affect consumers at the pump, but also at the airport. During his presentation at the 2021 J.P. Morgan Industrials Conference, Delta Air Lines chief executive Ed Bastian noted that despite selling more tickets, March 2021 could still result in a loss because “[fuel’s] at the levels we haven’t seen in quite a period of time.”

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About the Author

Joe Cortez is a personal finance writer for GoBankingRates. With over a decade of experience in financial journalism, Joe brings an insider knowledge of all things consumer finance, including credit cards, mortgages, and banking accounts. His work has appeared at NerdWallet, Business Insider and NextAdvisor. He is a member of the Society for Professional Journalists, National Association of Hispanic Journalists, and the Radio-Television-Digital News Association.
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