Pre-Thanksgiving gasoline prices at lowest level since 2015

The average U.S. regular retail gasoline price (the price that consumers pay at the pump) during the week before Thanksgiving this year was $2.10 per gallon (gal), the lowest average retail gasoline price for the Monday before Thanksgiving since 2015, according to the U.S. Energy Information Administration’s (EIA) Gasoline and Diesel Fuel Update.

Relatively low gasoline prices are attributable to relatively low crude oil prices, less overall demand for gasoline, and high gasoline inventories. Individual driving behavior, consistent with guidance from the Centers for Disease Control and Prevention discouraging holiday travel, is putting additional downward pressure on travel-based gasoline demand.

The price of crude oil generally accounts for about half of the total retail gasoline price in the United States. On November 16, the spot price of Brent crude oil was $43 per barrel, or $1.02 per gallon (one barrel is volumetrically equivalent to 42 gallons). Crude oil prices are the most variable portion of retail gasoline prices compared with other components such as taxes and distribution and marketing costs.

The American Automobile Association (AAA) expects a 4% decline in Thanksgiving holiday travel by automobile in 2020 compared with 2019. The decline is even sharper for air travel, which AAA expects to fall 48%, and for other travel (bus, train, cruise), which it expects to fall 76%.

EIA recently published a more detailed discussion of U.S. gasoline prices in This Week in Petroleum.

Principal contributor: Kevin Hack