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May 25, 2022 2:16 PM, EDT

Drivers Begin to Balk at Record Gas Prices

Fuel prices at a gas station in Woodbridge, N.J.Fuel prices at a gas station in Woodbridge, N.J., on May 17. (Stephanie Keith/Bloomberg News)

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U.S. gasoline demand — which earlier was expected to hold strong this summer despite soaring prices — is starting to show signs of cracks.

Demand on a four-week rolling basis just tumbled to the lowest level for this time of year since 2013, not counting 2020 when consumption was shattered due to the pandemic. Compared to 2021 levels, demand is down nearly 5%, data from the Energy Information Administration shows.

The pullback throws into doubt earlier expectations of a strong driving season this summer, with auto club AAA predicting travel volumes will approach pre-COVID levels this Memorial Day weekend as households tired of being stuck at home hit the roads. But as pump prices continue to set records nearly every day for the past two weeks, that rebound could be thrown into question. Last month, EIA warned high prices could limit some recreational travel this summer but still forecast more consumption than last year.

Chart shows four-week average of gas prices

Average U.S. pump prices rose to a record of $4.599 a gallon on May 24, 51% higher than the same time last year, data from AAA show. In California, prices are more than $6 a gallon.

“Figures over the past three weeks have shown that consumption is still struggling to overcome the higher prices as we head into the summer driving season, snuffing out the solid gains that were seen in April,” said Danny Adkins, an analyst with BNEF.

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