Why Gas Prices are 93 Cents Higher Than Last Year

U.S. Economy
April 12, 2021 Topic: Gas Prices Region: Americas Blog Brand: Politics Tags: U.S. EconomyGasGas PricesOilCoronavirus

Why Gas Prices are 93 Cents Higher Than Last Year

As the economy recovers, businesses reopen, and more folks get vaccinated it is not too surprising that the price of gas has increased with demand.

In the early weeks of 2021, many Americans began to notice that gas prices were steadily rising. In Los Angeles County, in fact, saw gas prices increase for thirty-four consecutive days, reached as high as $3.895 a gallon in mid-March, leading to fears of rising prices this summer.

What was the reason for the increase? There were several, including rising crude oil prices worldwide, rising demand due to the receding of the coronavirus pandemic, and the extreme weather in Texas, which affected supply.

However, in recent weeks the price of gas has begun to stabilize, even though it’s higher than it was this time last year.

According to Fox Business, the average price of regular-grade gasoline in the U.S. is $2.94 per gallon—a number at which it has held steady for the past two weeks. And one analyst stated that gas prices are “likely to remain stable or drop as wholesale costs begin to decrease.”

The $2.94 average price is 93 cents higher than it was a year ago, but there’s a big reason for that. In the opening months of the pandemic, gas prices plunged, as stay-at-home orders caused demand for gasoline to fall off a cliff. In late April of last year, oil prices even briefly fell below zero.

The Fox report also said that the highest average gas price in the country, at $3.99 a gallon, is in the San Francisco Bay Area, while the lowest, $2.50, is in Baton Rouge, Louisiana. Gas prices have traditionally differed by region for several reasons, including proximity to oil refineries and different gas taxes in each state.

According to the website Gas Buddy, while earlier this year gas prices looked like they were headed above $3, that hasn’t happened.

“It has been a fairly tame last few weeks at the pump for most areas after a particularly active February and March when prices were screaming higher,” Patrick De Haan, head of petroleum analysis for GasBuddy, said on the site’s official blog.

“After surging back then, we’ve seen the price increases fade, and while we haven’t seen much of a decline, prices have been holding near their yearly highs. For now, it feels like the risk of seeing the national average climb to $3/gal has been delayed by a recent surge in COVID-19 cases both here and abroad, limiting the upside to gasoline demand, but should things begin to improve, especially as we get closer to the start of the summer, we still have potential to see summer gas prices at their highest levels in years. Make no mistake, gas prices this year will be tied to the hip of the Covid situation.”

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters.