Gasoline prices could hit the highest in three years this summer, the Energy Information Administration said in this year's edition of its Summer Fuels Outlook.
The authority said it expected the impact of the pandemic on fuel markets in the United States to remain but weaken from last year, noting the vaccination drive and the federal government stimulus measures that are bound to reinforce the economic recovery of the country and, as part of it, spur greater fuel demand.
As a result, the EIA forecast gasoline prices could average $2.78 per gallon this summer, up from $2.07 per gallon last year. Last year's average for the driving season was the lowest since 2004, the EIA noted, because of the pandemic, which destroyed demand.
The authority also said it expected refining margins to improve thanks to this improving demand, even though benchmark crude oil prices will be higher this year than last. At $0.45 per gallon, the average refining margin the EIA projected for this summer would be $0.09 per gallon higher than the average for summer 2020.
The EIA said it expected gasoline consumption to hit a seasonal peak of 9.1 million bpd this August. This would be substantially higher than the 8.5 million bpd it recorded for August last year but still lower than pre-pandemic levels, at 9.8 million bpd for August 2019.
The upside potential in gasoline consumption remains limited because of the pandemic, the EIA said. Despite the creation of hundreds of thousands of new jobs, which would typically mean more commuting and therefore higher gasoline demand, many people are likely to continue working from home as many companies remain cautious or adopt a hybrid work model.
"Although COVID-19 related travel recommendations and social restrictions are likely to ease over the summer as more Americans are vaccinated and case levels fall, some behavioral changes might be more lasting, which could further limit increases in gasoline consumption," the EIA said. "The degree to which these behavioral changes will occur contributes to the uncertainty in EIA's gasoline consumption forecast."
By Irina Slav for Oilprice.com
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