Gas Prices Have Soared so High the US Is Now Seeing Demand Destruction

  • The average gallon of gas in the US hit a high of $ 4.59 Tuesday, about 51% higher than a year ago.
  • Demand on a four-week rolling basis was its lowest for this time of year since 2013, excluding 2020.
  • Costs and a demand slowdown could dash expectations for a driving season resembling pre-COVID times.

Pain at the pump has gotten so bad that demand for gasoline is dropping just as the summer driving season is about to begin.

Demand for a four-week rolling basis has hit its lowest level during this time of year since 2013, excluding the pandemic outbreak period in 2020, according to data from the Energy Information Administration compiled by Bloomberg. Compared with year-ago levels, demand is down roughly 5%.

Prices at gas stations across the US have hit record after record over the past two weeks, dashing some hopes for a driving season that approaches pre-COVID-19 levels, AAA previously predicted.

The average gallon of gas in the US hit $ 4.59 on Tuesday, about 51% higher than a year ago, according to AAA data. Regular gas prices have never hit this level. And in California, AAA data showed, prices can be over $ 6.

The demand destruction stemming from the high gas prices could alter earlier forecasts for prices to climb even higher.

A JPMorgan note on May 18 said the average US gas price could surpass $ 6 a gallon this summer as driving season gets fully underway.

“US retail price could surge another 37% by August to a $ 6.20 / gal national average,” analysts led by Natasha Kaneva wrote.

Read more: Rising oil prices are just a sliver of what’s to come, says an energy expert. He breaks down the top 3 things investors need to understand in the face of an upcoming unprecedented energy crisis, and how to play the market.

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