Why are gas prices increasing? National average nearing pre-pandemic level

Gas prices have slowly been increasing since the November general election, but a leading analyst says the reasons aren’t all political.

The national average for a gallon of regular unleaded gas Tuesday morning is $2.38, up 16.3 cents from last month, according to GasBuddy.com. Ten states had increases last week of at least 10 cents per gallon, AAA reported.

It’s a stark difference from the beginning of the COVID-19 pandemic, when prices were on a steep downward trajectory. The national average dipped from $2.51 per gallon on January 1 last year to $1.82 on April 1, Gas Buddy’s price trends chart shows.

Since the presidential election, prices have increased nearly 30 cents.

So what’s with the surge?

Along with expected cuts to oil production worldwide, there’s optimism that the coronavirus vaccines will strengthen the demand for oil, according to the U.S. Energy Information Administration.

“Expectations of economic recovery associated with the approval and production of a number of COVID-19 vaccines is perhaps the most significant demand-side factor in crude oil price changes,” the federal administration said in a report earlier this month. “Vaccine efforts have contributed to a broad increase in prices across most asset classes and commodities, reflecting market expectations for economic growth.”

However, the demand for gas is still fairly low, AAA reported Tuesday.

“The higher price of crude is outweighing sustained low gasoline demand and a build in gasoline supply,” said AAA spokesperson Jeanette Casselano McGee. “Motorists can expect gas prices to continue to climb through at least the end of the month.”

An increase in gas prices following a presidential election isn’t new. Prices increased 26 cents from Nov. 28, 2016, to Jan. 8, 2017 — 12 days before Trump took office, according to Gas Buddy analyst Patrick De Haan.

That’s not to say President-elect Joe Biden is totally off the hook when it comes to the increase.

Biden — set to be sworn into office on Wednesday — is planning on ending the expansion of the Keystone XL pipeline as part of his plan to confront climate change, The Washington Post reported.

The pipeline was expected to bring oil 1,200 miles from Alberta to Nebraska, according to the BBC. It has been a top priority for Canada and Canadian officials are urging Biden to reconsider, the Associated Press reported.

“Cancelling the Keystone XL would mainly hurt consumers by limiting reliable crude oil imports from Canada and again reducing the US’ energy security,” De Haan said.

This story was originally published January 19, 2021 at 9:51 AM with the headline "Why are gas prices increasing? National average nearing pre-pandemic level."