Gas prices have risen so much that the US is now seeing demand destruction

• The average gallon of gas in the United States hit a high of $4.59 on Tuesday, 51% higher than it was a year ago.
• Demand on a rolling four-week basis was the lowest this time of year since 2013, excluding 2020.
• Costs and slowing demand could shatter expectations for a pre-COVID driving season.

The pain at the pump has become so bad that the demand for gasoline is dropping completely as the summer driving season approaches.

Demand on a four-week rolling basis is at its lowest during this time of year since 2013, with the exception of the pandemic in 2020, according to data from the Energy Information Administration compiled by Bloomberg. Compared to last year’s levels, demand is down about 5%.

Gas station prices across the United States have hit record after record over the past two weeks, dashing some hopes of a driving season approaching pre-COVID-19 levels, AAA previously forecast.

A gallon of gas in the United States averaged $4.59 on Tuesday, up about 51% from a year ago, according to AAA data. Regular gas prices have never reached this level. AAA data in California showed prices could be more than $6.

The destruction of demand caused by higher gas prices could change previous expectations of higher prices even further.

A JP Morgan memo on May 18 said the average US gas price could exceed $6 a gallon this summer as the entire driving season begins.

“The US retail price could rise another 37% by August to $6.20/gallon on the national average,” analysts led by Natasha Kaneva wrote.

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