ALEXANDRIA, Va.—Spring is in the air, and that means gas prices are creeping up, sparking consumers to ask why. “Obviously demand took a huge hit in 2020 [because of the pandemic],” said Denton Cinquegrana, chief oil analyst for the Oil Price Information Service (OPIS), on this week’s episode of Convenience Matters, “Gas Prices in 2021.” As a result, refineries had to slow down production just because margins were bad.”
In early 2021, prices started inching up as more people began to get out more with COVID-19 vaccinations. “There’s this pent up demand [to travel],” he said. “There’s some predictions out there that we [might] hit some really high numbers during the summer, … [but] I still think we’re going to trail 2019 as far as demand is concerned.”
While there’s a correlation between fuel demand and vehicle miles traveled (VMT), it’s often not as simple as consumers think because of the differences in fuel efficiency, especially in newer vehicles. “It might not match up as it once did,” Cinquegrana said.
Overall, gas prices follow oil prices, so when oil prices rise, gas prices tend to follow. During the spring, gas prices typically jump about 50 cents per gallon during the switch to summer blend fuel, which requires some refineries to revamp operations for the production. Cinquegrana pointed to the Biden Administration’s agenda “being more friendly to biofuels and probably less friendly to oil in general,” as contributing a little to the rising pump prices.
Other reasons he cited include OPEC taking some production off the market and U.S. production dropping significantly because of lower prices in 2020. “So you’re seeing less oil, less oil on the markets these days, but at the same time, you don’t need as much oil, considering gasoline demand is still down,” he said.
Listen for more insights and predictions into gas prices this year on the podcast. Each week a new Convenience Matters episode is released. With more than 250 episodes to choose from, the podcast can be heard on Apple Podcasts, Spotify, Google Play and other podcast apps and YouTube and at www.conveniencematters.com. Episodes have been downloaded more than 200,000 times by listeners around the world.