Is Demand Destruction for Gas Already Here?
Compared to last year, demand has fallen by roughly 5 percent.
For five straight painful weeks, the nation’s average gas price has continued to trek higher—settling at $4.60 per gallon on Thursday, according to AAA data.
That price is a full 51 percent higher than this time last year. As a result of these elevated prices, some experts' predictions may be coming true in the form of demand destruction.
According to Insider, the “pain at the pump has gotten so bad that demand for gasoline is dropping just as the summer driving season is about to begin.” The news outlet pointed out that during a four-week rolling basis, demand for gas hasn’t reached such a low level during this time of the year since back in 2013, excluding the pandemic period in 2020, according to data from the Energy Information Administration that was compiled by Bloomberg.
Compared to last year, demand has fallen by roughly 5 percent. Though, some experts are still contending that drivers shouldn’t expect to see any relief at the pump due to robust demand.
“Demand is up,” Andrew Gross, the national spokesman for AAA, told Fox News this week. “Typically this time of year we are in a little bit of a lull. There is often a demand lull between spring break and Memorial Day and we had a little bit of it about two weeks ago, but then last week … there was actually an increase, which is very unusual. I don’t think I’ve ever seen that,” he continued.
Patrick De Haan, head of petroleum analysis at GasBuddy, echoed similar sentiments. “With more Americans planning to hit the road for Memorial Day this year compared to last, prices will be over $1.50 per gallon higher than last year,” he said in a release.
However, per Fox Business, a new report from Longwoods International is supporting the notion that soaring gas prices will force Americans to spend less this summer and adjust, or even cancel, their travel plans. “Travel patterns for spring/summer travel season may be different than originally expected as folks may alter how they travel and spend in order to stay within their budget,” Amir Eylon, president and CEO of Longwoods International, said in a release.
“The push-pull of pandemic versus gas prices will require the tourism industry to be nimble as demand fluctuates and travel costs weigh on consumers who are paying significantly more at the pump,” he concluded.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.