With gasoline prices hitting record highs this week — and experts predicting that they’ll keep rising in the coming weeks — many employers might have to reconsider their plans to have workers return to the office or worksite after a long period of remote work tied to the COVID-19 pandemic.
This will undoubtedly help workers save money on expensive commutes into the office. It might also help push gasoline prices lower as demand for fuel falls.
As GOBankingRates previously reported, the national average price of gasoline in the U.S. hit a new all-time high of $4.104 a gallon on Tuesday, according to fuel savings platform GasBuddy. The previous record of $4.103 was set back in 2008. GasBuddy expects the national average to rise as high as $4.25 a gallon by May.
The recent surge is tied to Russia’s invasion of Ukraine, which has put even more pressure on global oil supplies that were already tight to begin with. The combination of limited supply and rising demand — caused mainly by an uptick in car and air travel as COVID restrictions ease around the world — has pushed prices at the pump to their highest levels ever.
But as any economics professor can tell you, when demand recedes, prices tend to go down. That was the case a couple of years ago, when the pandemic first spread around the world. Air travel in many countries was drastically reduced, businesses were forced to temporarily close and millions of workers in the U.S. and elsewhere were instructed to work from home to prevent the spread of COVID.
This led to a major dip in the consumption of gasoline. The United States consumed about 124 billion gallons of finished motor gasoline in 2020, or around 8 million barrels a day, Bloomberg reported, citing data from the U.S. Energy Information Administration. That was the lowest level since 1997 and a 14% decline from the record set in 2018.
Much of the decline was caused by employees working from home instead of driving into the office.
“So much of the commute into the office drives gasoline consumption,” Patrick De Haan, head of petroleum analysis for GasBuddy, told WABE in an interview last summer. “Only because [of] the pandemic now have Americans started to be allowed the freedom to work from home when possible, and the implications on gasoline consumption can’t be understated. This is a paradigm shift … Much of the portion of [gasoline] demand that is consumed for the commute has been derailed.”
Not coincidentally, gasoline prices also fell in 2020. The average gas price in the U.S. was $2.242 a gallon in 2020, according to the US Inflation Calculator website, which cited data from the Bureau of Labor Statistics. That was down from $2.698 in 2019 (pre-COVID) and $2.794 in 2018.
In fact, the price in 2020 was the lowest since 2016 and the second-lowest since 2004. Adjusted for inflation, the 2020 price of gasoline was the lowest in the 40-plus years since the BLS started tracking data, dating to 1978.
The spike in gas prices that began last year was caused by a shortage of fossil fuels tied to global supply-chain disruptions and an unwillingness on the part of major oil producers, such as OPEC, to release more reserves. These problems won’t go away any time soon — especially in light of the Russia-Ukraine conflict.
So don’t expect gas prices to move anywhere near the lows they established a couple of years ago. But prices could ease if remote work returns on a mass scale and gasoline demand tumbles along with it.
More From GOBankingRates