Increased demand driving up gas prices

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Prices at the Gas Pump

LEXINGTON, Ky. (WTVQ) – Just like Americans across the country, Kentuckians are filling up at the pump more and more. Despite the increased demand, the Bluegrass saw only modest increases in the average gas price during the past week.

That’s not been the story everywhere, however.

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The slow, but steady, rise in demand has pushed the national pump price more expensive by 13% since mid-May. Today’s national average is $2.10. That is seven cents more on the week and 24 cents more on the month, but still 59 cents cheaper on the year.

Since that same mid-May timeframe, gasoline demand has increased 18% to 7.9 million barrels per day, according to the latest Energy Information Administration (EIA) report.

“As Americans drive more, they are re-fueling gasoline demand levels, which is helping to lift pump prices in many areas of the country, though not as much here in the Bluegrass,” said Lori Weaver Hawkins, manager of public and government affairs for AAA Blue Grass.

“Higher demand will contribute to increasing gas prices in the coming weeks, but they aren’t going to spike to typical summer prices. That’s because demand won’t be sufficient enough to drive down stock levels. Gasoline stocks sit at a significant surplus of nearly 24 million barrels year-over-year,” Hawkins continued.

Kentucky joins only one-third of states averaging $1.99 per gallon or less, and the majority of those are states in the South and Southeast.

Kentucky’s average is up just a penny from last week, now at $1.99. That’s 33 cents higher than a month ago, but still 51 cents lower than the average of $2.50 seen a year ago.

In Lexington, the average price is now also $1.99, up only a penny from last week after making an 18 cent climb the week before. The current average in Lexington is 40 cents higher than last month.

In Nicholasville, the average price is up just a penny from last week, landing at $1.93, while the average is also just a penny higher in Georgetown at $2. Versailles remains at the $2 mark and Winchester’s average is holding steady at $1.99. Richmond is at $2.01, up just a penny from a week ago.

  • The nation’s top 10 largest weekly increases: North Carolina (+13 cents), Montana (+12 cents), Texas (+12 cents), South Carolina (+12 cents), Nebraska (+12 cents), Colorado (+12 cents), Kansas (+11 cents), Florida (+11 cents), Wisconsin (+11 cents) and Georgia (+10 cents).
  • The nation’s top 10 least expensive markets: Mississippi ($1.74), Louisiana ($1.76), Arkansas ($1.79), Alabama ($1.80), Texas ($1.81), Oklahoma ($1.81), Missouri ($1.85), South Carolina ($1.85), Virginia ($1.86) and Tennessee ($1.87).  

Eight Great Lakes and Central state averages pushed more expensive by double-digits on the week. Nebraska (+12 cents), Kansas (+11 cents) and Wisconsin (+11 cents) had the largest increases in the region and land among the top 10 states with the biggest weekly jump. Illinois (+1 cent) and Indiana (+2 cents) saw the smallest weekly increases seen in the region.  State averages in the region range from $1.84 to $2.30.

The large price swings are surprising given that regional gasoline stocks and refinery utilization both held steady on the week at 54 million barrels and 75%, respectively, according to EIA data. Typically large jumps at the pump coincide with a large draw in stocks. However, this region typically sees high volatility in price swings from week to week. It’s likely many of the states which saw large increases in the last week will see smaller increases in the week ahead.

At the end of Friday’s formal trading session, Western Texas Intermediate, the oil benchmark, decreased by 8 cents to settle at $36.34 per barrel. Domestic crude prices decreased last week amid increased market concern that an increase in new coronavirus infections could lead to another reduction in crude demand.

Additionally, EIA’s weekly report showed that total domestic crude inventories grew by 5.7 million barrels last week, bringing the total to 538.1 million barrels. The increase in crude supplies also helped to push prices lower, since it signals that domestic crude production may need to reduce further in order to meet lower than normal demand. If these trends continue this week, crude prices could decline further.

Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.