Increased demand likely to keep gas prices high for several months, AAA says
Demand for gas in U.S. remains at same level as it was in middle of summer
- The statewide average gas price surged 5 cents over last week and now sits at $3.17 for a gallon of regular unleaded fuel.
- That represents an increase of $1.12 over New Mexico's average price for that day a year ago.
- Motorists in Farmington are paying the highest prices in the state.
FARMINGTON —Despite an end to the busy summer driving season, demand for gasoline remains high across the United States — and that means there is no end in sight for higher gas prices, according to a spokesman for AAA Texas/New Mexico.
The AAA New Mexico Weekend Gas Watch issued Oct. 7 shows the statewide average gas price surged 5 cents over last week and now sits at $3.17 for a gallon of regular unleaded fuel. That represents an increase of $1.12 over New Mexico's average price for that day a year ago.
Motorists in Farmington are paying the highest prices in the state, as has been the case since prices started rising in December 2020. The average cost per gallon in Farmington is $3.42 — up 4 cents from last week and $1.35 higher than a year ago.
The national average is $3.24. The average price in Albuquerque is $3.11, while Las Cruces motorists pay an average of $3.17 and Santa Fe drivers pay an average of $3.20.
Daniel Armbruster, a public affairs specialist for AAA Texas/New Mexico, acknowledged that gas prices in the U.S. traditionally begin to come down after Labor Day weekend as demand declines. That hasn't happened this year, however, as demand has remained elevated.
According to the U.S. Energy Information Administration, demand sat at more than 9.4 million barrels of gasoline a day on Oct. 1 – a strong increase over the average of 8.9 million barrels a day on Oct. 2, 2020.
"Anything over 9 million barrels a day is pretty hefty demand," said Joshua Zuber, another public affairs specialist for AAA New Mexico/Texas.
The demand for gasoline in the U.S. remains at approximately the same level now as it was in the middle of July, according to the EIA.
"I can tell you it is unusual," Armbruster said of the elevated demand this time of year. "Usually in the fall, we see demand falling off and gas prices fall off, as well, at least until Thanksgiving."
He attributed the change this year to more people returning to work at their office instead of working remotely from home, as so many of them were during the height of the COVID-19 pandemic.
Demand for gas in the U.S. bottomed out in April 2020 at 5.4 million barrels a day, according to the EIA.
The odds of gas prices coming down this fall are not good, Armbruster said, although there are some factors that could lead to that.
"It's really going to depend on what happens with OPEC," he said, explaining that the 13-nation cartel of oil-producing states has indicated it will increase production by 400,000 barrels a day in response to the increased demand.
"But that doesn't necessarily mean more supply in the U.S.," Armbruster said. "There's not really a strong sign in the works at this point that we'll see a decrease."
With hurricane season in the Atlantic Ocean now past its peak and headed toward its traditional end at the end of November, Armbruster said potential supply disruptions caused by the storms will be less of a factor. But he noted that few refineries had their operations affected by storms this year, so that hasn't played much of a role in the upward pressure on prices.
"We didn't see as much of an impact this year as we did in 2017 with Hurricane Harvey," he said.
The one thing that likely would bring prices down, Armbruster said, is a decline in demand — and the pandemic could contribute to that.
"If there were to be another variant, that would affect gas demand," he said. "In the meantime, I think we'll continue to see demand climb and prices are not likely to go down much, if at all."
As high as prices have climbed, they still don't compare to the record-high prices seen in the summer of 2008 in New Mexico. At that time, motorists across the state were paying an average of $4.08, while the national average was $4.11. The average price in Farmington then was $4.15.
"We're not close to that, certainly," Armbruster said. "And I don't anticipate we would get close to that, but some areas are seeing seven-year highs. Prices haven't been this high since 2014 in some places."
Mike Easterling can be reached at 505-564-4610 or email@example.com. Support local journalism with a digital subscription.