Principal contributor: Alexander DeKeyserling
The average price that consumers paid at the pump for U.S. regular gasoline on the Monday before Thanksgiving this year was $3.40 per gallon (gal). This price is $1.29/gal (62%) higher than last year and is the highest pre-Thanksgiving price since 2012 (in nominal terms), according to our latest Gasoline and Diesel Fuel Update. U.S. gasoline prices are 82 cents/gal (32%) higher than at the same time in 2019, before the COVID-19 pandemic. October 2021 had the largest recorded year-over-year increase in gasoline prices, at $1.13/gal, since we began collecting gasoline prices in 1990.
Typically, U.S. retail gasoline prices follow a seasonal trend: prices increase in late summer when people drive more frequently and then decline going into the winter months. This year, gasoline prices did not increase in September but instead rose 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.
Higher crude oil prices, more demand for gasoline, and lower gasoline inventories are contributing to higher gasoline prices. Crude oil prices are the primary determiner of U.S. gasoline prices, and the crude oil price made 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.
The American Automobile Association (AAA) forecasts that 53.4 million people will travel for the Thanksgiving holiday, 13% more than in 2020 and 5% less than in 2019. 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.
Retail gasoline prices vary significantly across the United States because of several factors. They include regional supply and demand differences, gasoline specifications, logistical constraints, and taxes. On 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
- $4.19/gal on the West Coast
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.
We recently published a more detailed discussion of U.S. gasoline prices in This Week in Petroleum.