Gas Prices Are Surging, Demand Is Slipping Ahead of Memorial Day Weekend

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Record high prices are loosening the pockets of Americans ahead of the typically peak driving season in summer

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Oliver Zapata Ramirez—a 25-year-old video editor at a production company in Columbus, Ohio—says he’s cut his driving by about 300 miles a month since March because of higher gas prices. When possible, he commutes by bike or bus to his office, which is about 3 miles from his home.

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“I try my best not to drive right now,” said Mr. Zapata Ramirez, noting that it costs him $50 to fill half a tank of gas in a 2006 Kia Sportage. It lasts about a week, They said.

Gasoline demand fell to 8.8 million barrels as of May 20, measured on a four-week rolling average, according to the US Energy Information Administration. The last time the average demand at this time of year was lower was in 2013, except for the massive 2020 drop in demand during the pandemic lockdown.

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The skittishness comes as gas prices continue to rise. The average price of a gallon of regular unleaded gas in the US hit $4.60 on Thursday, up 51% from a year ago and a new all-time high. Prices rose above an average of $4 a gallon in all 50 states last week.

Analysts expect prices not to fall soon. A JPMorgan report this month said retail gas prices could reach $6.20 a gallon by August.

Patrick de Haan, head of petroleum analysis at price tracker GasBuddy, said: “A big part of why we’re not seeing higher demand is that people are thinking more about reducing their consumption due to higher gas prices.” “.

May is when gas demand typically peaks, as the weather warms up and Americans prepare for road trips and other travel around Memorial Day weekend. AAA predicted earlier this month that Memorial Day would travel this year will return to epidemic levels,

Even amid a recent drop in gasoline demand, analysts note that people are itching to travel more now than they did during the first two years of the pandemic. The household savings rate is high and unemployment is low, two factors that can help people cope with high gas prices.

Mr. de Haan said consumer concern over gas prices is currently not as high as it was during the financial crisis, when gas prices jumped sharply in 2008. Adjusted for inflation, gas prices were higher than they were today, Mr. De Haan said.

“I don’t think we’re done” [at] The fever pitch level of consumers is abandoning cars and making themselves uncomfortable because gas prices are too high,” he said.

Gas prices have soared in recent months following Russia’s invasion of Ukraine, which has disrupted the global oil market. The EU’s recent discussion of withdrawing from buying Russian oil has sent additional shock waves through an already tense oil market.

Several states have suspended their gas taxes, including Georgia, whose governor on Thursday extended his gas tax suspension until mid-July.

The Biden administration has also tried to stem the rise in gas prices. The US Environmental Protection Agency issued an emergency exemption in April that allows gas stations to sell gasoline with a higher-ethanol content this summer, despite concerns about rising air pollution emissions.

The Biden administration has also tapped oil supplies from the US Strategic Petroleum Reserve, releasing 1 million barrels of oil a day. But gas prices continue to rise.

Mr Zapata Ramirez, the driver of the Kia Sportage, said he plans to move to New York City in June. He said he is moving because he wants better access to public transport and wants to be closer to friends.

“I’m looking forward to selling my car or leaving it to my parents,” said Mr. Zapata Ramírez.

Write to Omar Abdel-Baqui at [email protected]

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