Drivers set to buy more gas, but at what cost?

U.S. drivers, freed to travel as COVID-19 vaccines become widely available, will buy more gasoline this summer despite paying more at the pump, the Energy Information Administration says.

Gasoline consumption will rise this summer compared with the April-September period in 2020, when lockdowns during the peak of the coronavirus pandemic halted most unnecessary travel, the EIA said. During the height of the summer travel season, the EIA said, consumers will buy 9.1 million barrels of gasoline per day, compared with 7.7 million gallons a day in January and 8.5 million barrels a day in August 2020.

Lingering effects of the pandemic will continue to weigh on gasoline purchases, however, as many Americans continue to work from home.

Nevertheless, gasoline demand has risen for six consecutive weeks, said Patrick De Haan, head of petroleum analysis for GasBuddy, the fuel price-tracking website. If that continues, he said, gasoline prices could rise higher than even the EIA expects.

The Energy Department’s agency says the retail price of gasoline in the U.S. will average $2.78 per gallon this summer, 72 cents more than last summer’s average of $2.06 per gallon. But increasing production from OPEC and its allies as well as U.S. producers will help keep prices from rising much more, it said.

De Haan, on the other hand, says gas prices could surge higher.

“We may see a second attempt at a run at a national average of $3 per gallon in the months ahead,” De Haan said earlier this week. “While the last few weeks have

seen gas prices hold mostly steady, it’s not likely to last forever, especially as Americans increasingly get outside as warmer temperatures return.”

While gasoline prices in Houston have recently dipped to an average of $2.56 a gallon, according to GasBuddy, they are 14 cents higher than a month ago and 88 cents higher than the same week in 2020.

The steady recovery of crude prices this year has helped drive that increase. The price of West Texas Intermediate, the U.S. benchmark, has risen from about $48 at the end of 2020 to over $66 last month before falling to near $60 recently. It settled Thursday at $59.60, down 17 cents.

The EIA predicts that Brent, the global benchmark, will average $64 a barrel this summer, $28 more than last summer. Brent settled at $63.18 on Thursday.

Diesel consumption, which the EIA views as a barometer of the nation’s economy, is expected to increase this year as trucking and shipping activity grows. The pandemic’s effect on diesel was muted compared with how it hammered gasoline. Diesel consumption fell 8 percent during 2020 compared with gasoline’s 14 percent dive. In the first quarter this year, diesel consumption was 2 percent higher than during the first quarter of 2020.

Diesel prices will average $2.96 per gallon this summer, compared with an average of $2.43 per gallon last summer, the EIA said.