US drivers to see lowest gasoline prices since 2009 this holiday weekend: EIA

Houston (Platts)--22May2015/1253 pm EDT/1653 GMT

US drivers hitting the roads this Memorial Day weekend can expect to find the lowest prices at the pump since 2009, federal data showed Friday.

"On May 18, the US average retail price for gasoline was $2.74/gal, or 92 cents per gallon lower than at the same time last year," the US Energy Information Administration said in a report published Friday.

"This is the lowest average price heading into the Memorial Day weekend -- the traditional start of the summer driving season -- since 2009," the report said.

After a lag, pump prices began following global oil prices down last summer, reflecting a glut of oil followed by gasoline pressing on the market.

Wholesale gasoline values hit bottom in December and began to rebound early this year, and this trend has also been seen in pump prices.

This spring, gasoline values have been on the rise, reflecting recovered demand and the seasonal shift to more expensive summer-grade gasoline.

UPWARD TRAJECTORY

Two questions loomed large for gasoline market watchers heading into the Memorial Day weekend: Will expectations of higher demand materialize this summer, and will rising pump prices in turn curb demand?

AAA Travel projected Memorial Day weekend will have the highest travel volume for the holiday in 10 years, with 33 million drivers expected to get behind the wheel to reach their destinations.

Throughout this spring, US Gulf Coast gasoline market participants have also reported seeing higher demand in their retail systems.

Some market watchers, however, are concerned that stronger US demand may not materialize this summer.

"I find recent increasing demand figures ... baffling," Energy Analytics analyst Thomas Finlon said Monday. "I do think they'll break down after Memorial Day weekend."

Others, however, argued that gasoline demand is inelastic and prices have yet to hit a level that would discourage demand.

AAA said the cheapest pump price in the country on Friday could be found in South Carolina at an average of $2.426/gal, with California at a US-high $3.780/gal.

--Amanda Rayborn, amanda.rayborn@platts.com
--Jeffrey Bair, jeffrey.bair@platts.com
--Edited by Annie Siebert, ann.siebert@platts.com

 

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