A gas station employee adjusts gasoline pump prices as they continue to fall due to turmoil in the oil market on April 21, 2020 in Arlington, Virginia.
Olivier Douliery | AFP | Getty Images
According to fuel data company GasBuddy, US gas spending should recover slightly this year after falling nearly $ 100 billion in 2020 due to the coronavirus pandemic.
GasBuddy predicts US gasoline spending this year to grow to $ 325.6 billion, up 16.3% from $ 280 billion in 2020 – the lowest spending since at least 2004. That includes all gasoline , which is supplied to the US market for consumers and commercial customers.
“Americans pumped far fewer gallons last year than they would in a normal year,” Patrick De Haan, head of petroleum analysis at GasBuddy, told CNBC. “Gasoline levels are nowhere near as high as they normally are.”
Like almost everything in 2020, Covid-19 has turned the gasoline and oil industry on its head. This included oil prices, which are linked to gasoline prices and went negative for the first time when Covid-19 spread across the US and led to lockdowns last spring.
According to GasBuddy, which collects data from more than 150,000 gas stations in North America, the higher spending this year is expected to be fueled by an average increase in gas prices of 27 cents per gallon domestically. More and more Americans are commuting to work instead of using public transport or driving instead of flying, De Haan said.
“Overall, I think it is more likely that prices will rise in 2021 compared to 2020, as Americans are at least starting to learn how to live in this pandemic,” De Haan said.
In terms of gas prices, GasBuddy expects much of the US population to see prices in the $ 2 per gallon range. But big cities in California and Hawaii should spend $ 3 year-round, while others like Chicago, New York City, Philadelphia, and Seattle also run the risk of seeing average prices above $ 3 per gallon in 2021.
GasBuddy expects gas prices to average $ 2.44 per gallon in 2021, up from $ 2.17 per gallon in 2020.
De Haan warned that Covid-19 could disrupt the market again if further lockdowns or a problem with the introduction of vaccines arises. Biden’s new government, which supports the use of electric vehicles, also remains a wild card in terms of possible taxes and regulations on fossil fuels.
“There are many variables that could inevitably change what we expect in our forecast,” De Haan said, adding that the effects of Covid-19 are more of a threat than the Biden government in 2021.
On the other end, De Haan said another problem was that demand for gas was growing faster than supply. Gasoline is made from crude oil, and retail gas prices are tied to the market price of crude oil and wholesale gasoline prices. If supply becomes low due to capacity cuts in 2020, the market may not be able to meet demand, which would lead to higher prices, De Haan said.
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