While prices at the pump are still historically low, the roughly 40 cent price increase likely means Americans will collectively pay $800 million more on Thanksgiving travel this year.
GasBuddy projects the average national gasoline price will be $2.53 per gallon for the Thanksgiving holiday weekend. It’s the priciest Thanksgiving prices since 2014, but still well below where prices were in 2012.
What’s interesting about this year, however, is the average gas price rose 9 cents in the last month, according to GasBuddy, at a time when prices usually trend downward. This year’s price increase is the largest since 2007 when the cost of a gallon rose 27 cents in the lead up the Thanksgiving.
“This year has been unique at the pumps,” GasBuddy’s lead petroleum analyst Patrick DeHaan said in a statement.
“On average Americans are paying nearly 40 cents a gallon more than last year, which means collectively we’re spending $800 million more on fuel over the Thanksgiving travel period,” DeHaan said. “Drivers should pay close attention to prices to avoid overpaying.”
So, what’s behind the unusual gas price increase?
The Energy Information Administration (EIA) says refinery outages caused by Hurricane Harvey pushed the national average gas price up 28 cents per gallon after it made landfall in August.
Harvey forced a sizable portion of U.S. refining and pipeline capacity to shut down, and many Americans are still feeling its residual effect.
EIA said rising oil prices also played a role, noting “a key global crude oil benchmark, was $62.94 per barrel as of November 13, more than $21 per barrel higher than the price from the same time last year.”
What’s driving up oil prices? Higher demand, U.S. crude export growth, and, importantly, OPEC is still implementing production cuts aimed at buoying prices.
There are other factors too. Higher demand for gasoline is also likely driving up prices, shrinking gasoline inventories faster than expected, according to Capital Economics.
AAA, which estimates holiday travel, projects nearly 51 million Americans will travel at least 50 miles this Thanksgiving — a 3.3 percent increase from last year.
The vast majority of travelers this Turkey Day plan on driving, according to AAA, meaning they will likely have to fill up at some point and face gasoline prices at 3-year highs.
In California, drivers can thank the Democratic-controlled state government for higher prices. The state’s new 12 cent gas tax increase went into effect in early November.
However, EIA projects “both crude oil and gasoline prices will decrease in the coming months, with U.S. average gasoline prices reaching a low of $2.31/gal in January 2018.”
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