U.S. gasoline prices stable but primed for some volatility

U.S. gasoline prices stable but primed for some volatility
by Daniel J. Graeber
Washington DC (UPI) Jun 12, 2021
Gasoline prices in the U.S. economy have been relatively stable, though some volatility is expected given some competing trends, data show.

Travel club AAA on Monday put the national average retail price at $3.59 for a gallon of regular unleaded gasoline, up only about 4 cents per gallon from this time last week and last month. State-by-state, however, and the picture is a bit more volatile in terms of price direction.

Illinois has a state average retail price of $3.98 per gallon, up 10 cents from week-ago levels, but only 6 cents higher than month-ago levels. Florida too saw heightened volatility relative to national trends.

"We've seen some hefty gas price increases in several states in the Great Lakes and in Florida," said Patrick DeHaan, the senior petroleum analyst at Chicago-based GasBuddy.

DeHaan said those markets are typically erratic, though recent price increases at the national level may be more reflective of demand. Over the four-week period ending June 2, federal data show the total amount of gasoline sent to the market, a proxy for implied demand, averaged 9.2 million barrels per day, a 1.8% increase over the same period last year.

Prices help explain why demand is up from year-ago levels despite increasing headwinds in the U.S. economy. The global energy market scrambled last year to adjust to the loss of Russian energy supplies that came as a result of war-related sanctions, pushing retail gasoline prices sky-high.

AAA put the national average at this time last year at $5.01 per gallon. Illinois at this point in 2022 had a state average of $5.56, while Florida posted a $4.89 average.

Meanwhile, conditions are ripe for some major movements in the broader market. Should the Federal Reserve hike interest rates again later this week, it could create enough headwinds to stymie any future growth.

"With the Fed meeting this week to potentially alter interest rates again, we could see some turbulence in oil markets, potentially impacting states where gas prices were quiet this week, while the states that saw a big jump last week could see some moderate relief in the week ahead," DeHaan said.

Inflation is running about 2% higher than the Fed's target rate, though recent increases in the number of people without a job could give policymakers reason to pause.