Despite Record Gas Prices, Demand Keeps Increasing

The (EIA) reports that gasoline prices hit a new all-time record last week, increasing 11.5 cents to $3.21 per gallon. National average prices are 32.6 cents per gallon higher than at this time last year. (Source: This Week in Petroleum)

Despite high prices, demand is 1% higher than last year. Drivers are buying gas at a rate of 9.433 million barrels per day, compared to 9.193 million barrels per day this time last summer. (Source: EIA Gasoline Demand)

However, the price of oil, at $64.93 per barrel, is $3.91 per barrel lower than last year. That means the shortage is in refinery production (earlier this year, due to planned maintenance and unplanned outages) and lower inventories. The EIA says the situation may not improve all summer, and could even get worse if demand keeps increasing (See EIA Report, May 16)

What It Means to You

Since current record gas prices are not reflective of record high oil prices, the impact on inflation should be minimal. Therefore, this is a temporarily painful situation, not a predictive indicator of economic distress. However, to alleviate your own distress, take some tips in the articles below.

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