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Gas prices have soared so high that the US is now seeing demand destruction ahead of the summer driving season

·1 min read
gas prices station california
A gas station near San Francisco.Phil Rosen/Insider
  • The average gallon of gas in the US hit a high of $4.59 Tuesday, about 51% higher than a year ago.

  • Demand on a four-week rolling basis was its lowest for this time of year since 2013, excluding 2020.

  • Costs and a demand slowdown could dash hopes for a driving season resembling pre-coronavirus times.

Pain at the pump has gotten so bad that demand for gasoline is dropping just as the summer driving season is about to begin.

Demand on a four-week rolling basis has hit its lowest level during this time of year since 2013, excluding the pandemic-outbreak period in 2020, according to data from the Energy Information Administration compiled by Bloomberg. Compared with year-ago levels, demand is down roughly 5%.

Prices at gas stations across the US have hit record after record over the past two weeks, dashing some hopes for a driving season that approaches pre-COVID-19 levels, AAA previously predicted.

The average gallon of gas in the US hit $4.59 on Tuesday, about 51% higher than a year ago, according to AAA data. Regular gas prices have never hit this level. And in California, AAA data showed, prices can be over $6.

The demand destruction stemming from the high gas prices could alter earlier forecasts for prices to climb even higher.

A JPMorgan note on May 18 said the average US gas price could surpass $6 a gallon this summer as driving season gets fully underway.

"US retail price could surge another 37% by August to a $6.20/gal national average," analysts led by Natasha Kaneva wrote.

Read more: Rising oil prices are just a sliver of what's to come, says an energy expert. He breaks down the top 3 things investors need to understand in the face of an upcoming unprecedented energy crisis, and how to play the market.

Read the original article on Business Insider