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US gasoline prices decline amid lower gasoline demand and falling crude oil prices

Published by , Editorial Assistant
Hydrocarbon Engineering,

On 20 November 2023, the Monday before Thanksgiving, the retail price of regular gasoline averaged US$3.29/gal across the US, 10% less than the same time in 2022. After adjusting for inflation (real terms), retail gasoline prices this Thanksgiving weekend are 13% lower than in 2022, but they remain higher than pre-pandemic levels for the third year. This Thanksgiving, the American Automotive Association (AAA) forecasts 55 million people will travel 50 miles or more for the Thanksgiving holiday, a 2% increase compared with 2022.

Typically, US retail gasoline prices follow a seasonal trend: prices increase in late summer when people drive more frequently and then decline going into the winter. Less gasoline demand than usual this fall (2023) and an early transition to winter-blend gasoline in California helped accelerate the decline in prices. Regulations on gasoline vapour pressure allow refiners to switch to less expensive components to produce gasoline in the fall, which tends to reduce gasoline prices.

Despite crude oil production cuts by OPEC+ members over the last year, concerns about slowing economic growth reducing world oil demand have continued to push crude oil prices down. The Brent crude oil price declined 15% from its most recent peak of US$96.55/bbl on 27 September 2023 to US$82.32/b on 20 November 2023, reaching its lowest level since July 2023. Crude oil prices are the primary driver of US gasoline prices, making up 55% of the total cost to produce a gallon of gasoline.

US gasoline prices vary regionally, reflecting local supply and demand conditions, different fuel specifications required by state laws, and taxes. Regional gasoline prices are usually highest on the West Coast because of the region’s limited connections with other major refining centres, tight local supply and demand conditions, and gasoline specifications that make it more costly to manufacture. West Coast prices as of 20 November 2023 averaged US$4.42/gal, down 8% since the same time last year.

The Rocky Mountain region faces similar logistical constraints as the West Coast, although overall the region has both less supply and demand. Rocky Mountain gasoline retail prices averaged US$3.20/gal on 20 November 2023, down 12% from 2022.

Gasoline prices are usually the lowest on the Gulf Coast, which holds about half of US refining capacity and produces more gasoline than it consumes. On 20 November 2023, the average retail gasoline price on the Gulf Coast was US$2.79/gal, down 8% from the same time in 2022.

On the East Coast, which has the most gasoline demand of the five regions, retail gasoline prices averaged US$3.17/gal, down 11% from 2022. In the Midwest, prices decreased 11% from this time last year to average US$3.12/gal on the Monday before Thanksgiving.

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