Supply Remains Tight as Driving Season Nears

This morning crude prices are up as the market prepares for the incoming driving season. Summer is nearly here, which means travel is going to pick back up. With fuel supplies stretched thin and gasoline inventories sinking, it’s looking like this summer could see significantly higher fuel prices.

Memorial Day typically marks the beginning of summer, and the beginning of travel season for Americans. This “travel season” usually lasts until Labor Day and starts to ease up shortly after. Now that Memorial Day is just a week away, many analysts are fearful about the supply crunch that could be associated with this holiday. New data is showing that more people are driving in the United States lately, and this will certainly start to pick up as planned summer vacations unfold. To add to the supply tightness, today a weaker U.S. dollar is making crude cheaper to buy, shaking up the supply chain even more.

Overall, declining inventories and close to $5/gallon gasoline is not making the greatest first impression for driving season for consumers and businesses alike. All but three states (Georgia, Kansas, Oklahoma) are experiencing at least $4/gallon gasoline prices. While understanding it may take a year or two before prices start to retreat at the pump, there will be some that decide against road-tripping this summer. The COVID-19 scare in the states is over as people resume normal travel, but a new scare is looming at the pump this summer.