The average U.S. regular retail gasoline price across all formulations (conventional and reformulated) on the Monday before Thanksgiving was $3.40 per gallon (gal), $1.29/gal (62%) higher than it was the week before Thanksgiving last year and the highest pre-Thanksgiving price since 2012 (in nominal terms). Compared with levels before the COVID-19 pandemic, prices are $0.82/gal (32%) higher than at the same time in 2019 (Figure 1). According to our latest Gasoline and Diesel Fuel Update, October 2021 saw the highest recorded year-over-year increase in gasoline prices ($1.13/gal) since we began collecting these data in 1990.
Higher crude oil prices, greater demand for gasoline, and lower gasoline inventories are continuing to push gasoline prices higher. Gasoline typically follows a seasonal trend: prices increase in late summer, when people drive more frequently, and then decline going into the winter months, when regulations on gasoline volatility allow refiners to use less expensive components to produce gasoline. This year, gasoline prices were flat in September and then rose nearly 20 cents/gal in October before leveling off in November. Our November Short-Term Energy Outlook forecasts that gasoline prices will fall 5% in December and remain close to $3.00/gal through the first half of 2022.
Crude oil prices are the primary driver of U.S. gasoline prices, making up 57% of the total cost to produce a gallon of gasoline in October 2021. The spot price for Brent crude oil was $79.70 per barrel (b) on November 22, an increase of $34/b (73%) compared with the Monday before Thanksgiving in 2020 and $16/b (25%) higher than the same time in 2019. Global demand for crude oil has outpaced production in 16 of the last 17 months since June 2020. This sustained imbalance has contributed to higher crude oil and petroleum product prices, including for gasoline.
Gasoline demand (measured as product supplied) increased consistently over the course of 2021 as COVID-19 restrictions eased and economic stimulus policies drove U.S. gross domestic product to exceed pre-pandemic levels by the second quarter of 2021. According to our Weekly Petroleum Status Report, the rolling four-week average demand for motor gasoline in October rose above the 2015–19 average for the first time since March 2020, effectively returning to pre-pandemic levels (Figure 2). The American Automobile Association (AAA) forecasts 53.4 million people will travel for the Thanksgiving holiday, a 13% increase over 2020 and 5% less than in 2019. This figure represents the highest single-year increase in Thanksgiving travel since 2005. Relaxed guidelines from the Centers for Disease Control and Prevention (CDC) for vaccinated people, lessening concerns over the COVID-19 Delta variant, and the recent opening of U.S. borders to fully vaccinated travelers from Mexico and Canada are likely contributing to rising gasoline demand going into the holiday weekend.
Gasoline inventories usually decline in November because of increased gasoline demand for holiday travel and because of lower refinery production as refiners end their October maintenance. Although total U.S. gasoline inventory withdrawals this fall were relatively large (Figure 3), regional inventories indicate differences in market conditions around the country. On the East Coast (PADD 1), the largest gasoline demand market in the United States, gasoline inventories were 6.0 million barrels (10%) below the five-year (2016–2020) average as of November 19. Similarly, Midwest (PADD 2) inventories have remained below the five-year average for most of 2021. However, Gulf Coast (PADD 3) inventories are in line with historical averages, and Rocky Mountain (PADD 4) inventories are above their five-year range. Inventories on the West Coast (PADD 5) fell below the five-year average in November for the first time since July.
Retail gasoline prices vary significantly across the United States because of regional supply and demand balances, gasoline specifications, logistical constraints, and taxes. As of November 22, regular retail gasoline prices were $3.03/gal on the Gulf Coast, $3.20/gal in the Midwest, $3.35/gal on the East Coast, $3.52/gal in the Rocky Mountains, and $4.19/gal on the West Coast (Figure 4). Notably, retail prices in every region except the Rocky Mountains have increased since the beginning of October. West Coast prices in particular continued to increase through November, reaching a $0.80/gal premium over the U.S. average. West Coast retail gasoline prices are often higher than the U.S. average price because of the region’s isolation from alternative supply sources, gasoline specifications that are more costly to manufacture, and higher taxes. In 2021, the West Coast has faced additional supply constraints because of reduced refinery capacity compared with 2019.
U.S. average regular gasoline and diesel prices decrease
The U.S. average regular gasoline retail price decreased less than 1 cent, remaining virtually unchanged at $3.40 per gallon on November 22, $1.29 higher than a year ago. The Gulf Coast price decreased more than 4 cents to $3.03 per gallon, the Midwest price decreased 2 cents to $3.20 per gallon, and the Rocky Mountain price decreased nearly 2 cents to $3.52 per gallon. The West Coast price increased more than 2 cents to $4.19 per gallon, and the East Coast price increased more than 1 cent to $3.35 per gallon.
The U.S. average diesel fuel price decreased 1 cent to $3.72 per gallon on November 22, $1.26 higher than a year ago. The East Coast and Gulf Coast prices each decreased nearly 2 cents to $3.69 per gallon and $3.46 per gallon, respectively, the Midwest price decreased more than 1 cent to $3.62 per gallon, and the West Coast price decreased less than 1 cent, remaining virtually unchanged at $4.42 per gallon. The Rocky Mountain price increased less than 1 cent, remaining virtually unchanged at $3.84 per gallon.
Propane/propylene inventories decline
U.S. propane/propylene stocks decreased by 1.0 million barrels last week to 73.6 million barrels as of November 19, 2021, 11.4 million barrels (13.4%) less than the five-year (2016-2020) average inventory levels for this same time of year. Gulf Coast inventories decreased by 0.7 million barrels, Rocky Mountain/West Coast inventories decreased by 0.3 million barrels, and Midwest inventories decreased slightly, remaining virtually unchanged. East Coast inventories increased by 0.1 million barrels.
Residential fuel prices decrease
As of November 22, 2021, residential heating oil prices averaged nearly $3.39 per gallon, 2 cents per gallon below last week’s price but almost $1.19 per gallon higher than last year’s price at this time. Wholesale heating oil prices averaged more than $2.43 per gallon, nearly 10 cents per gallon below last week’s price but more than $1.04 per gallon above last year’s price.
Residential propane prices averaged more than $2.72 per gallon, almost 1 cent per gallon below last week’s price but nearly 87 cents per gallon above last year’s price. Wholesale propane prices averaged almost $1.28 per gallon, more than 17 cents per gallon below last week’s price but nearly 63 cents per gallon above last year’s price.
|Retail prices||Change from last|
|Click to chart this seriesGasoline||3.395||-0.004up-arrow||1.293up-arrow|
|Click to chart this seriesDiesel||3.724||-0.010down-arrow||1.262up-arrow|
|Click to chart this seriesHeating Oil||3.388||-0.020down-arrow||1.186up-arrow|
|Click to chart this seriesPropane||2.724||-0.009down-arrow||0.869up-arrow|
|Futures prices||Change from last|
|Click to chart this seriesCrude oil||76.10||-4.69down-arrow||33.95up-arrow|
|Click to chart this seriesGasoline||2.212||-0.099down-arrow||1.037up-arrow|
|Click to chart this seriesHeating oil||2.293||-0.111down-arrow||1.007up-arrow|
|*Note: Crude oil price in dollars per barrel.|
|Stocks||Change from last|
|Click to chart this seriesCrude oil||434.0||1.0up-arrow||-54.7down-arrow|
|Click to chart this seriesGasoline||211.4||-0.6down-arrow||-18.8down-arrow|
|Click to chart this seriesDistillate||121.7||-2.0down-arrow||-20.9down-arrow|
|Click to chart this seriesPropane||73.612||-0.956down-arrow||-18.950down-arrow|