NJ gas prices remain high, but demand may never again reach 2019 levels
From 2016 through 2019, the United States averaged using about 400 million gallons of fuel per day, but a combination of changing work habits due to the COVID-19 pandemic, the continued emergence of electric or hybrid vehicles, and expected tightening of Federal Aviation Administration standards may mean the country never returns to that level of demand.
That's according to Tom Kloza, global head of energy analysis for the Oil Price Information Service, who said that trend is useful to think about when considering gas is costing New Jersey drivers about a dollar more per gallon right now than it did one year ago.
"If it was a dollar more than what we paid in 2013 or '14, we'd be paying $4.50 a gallon, so we were only paying about $2.20 or so a year ago," Kloza said.
Indeed, AAA Mid-Atlantic's Tuesday update showed the average price for a gallon of regular in the Garden State is $3.18, two cents higher than both the current national average and New Jersey's price last week, and 99 cents higher than this week in 2020.
Crude oil closed at $67.32 per barrel on Tuesday, which was up nearly a dollar from Monday's across-the-board losses but still down more than four bucks from the end of last week.
Kloza said COVID concerns, particularly over the Delta variant, drove the market lower on Monday, which could actually be a good sign for gas prices.
As those concerns persist, employers may once again prioritize working from home, leading to even less demand.
"I think we're going to get a break for the rest of July, and maybe into early August, and I think we're going to get a break because unfortunately, COVID is rearing its ugly head again," Kloza said.
And while leisure, recreational, and social travel has bounced back, commuter traffic might never follow suit. Kloza disagreed with reports suggesting that the recent July 4th weekend set an all-time travel record, pinning it closer to the 91% of 2019-level air travel AAA had predicted.
"Our own private surveys of about 30,000 gasoline stations across the country seem to indicate that we're still driving about 10% less, or more, than 2019," Kloza said.
Still, the next determining factor for gas prices will be the Atlantic hurricane season, which will make its greatest impact over the next 40 days or so.
That means, at least as far as Kloza expects, gas prices in New Jersey and elsewhere won't get a chance to budge too much before the fall.
"I would be loathe to suggest that we're going to see $2.75, $2.90 as the summer ends, because tropical activity looks like it's going to heat up," Kloza said.