The nationwide average price of a gallon of gas this morning sits at $4.76, according to AAA. In nine states, residents are paying over $5 per gallon on average. California, where America’s highest gas prices live, has an average of $6.24.
Is the high cost of gas making Americans drive less? Only a little. Each week, we drive a little more than the week before. That’s normal, as the summer months encourage Americans to head out on road trips and vacations.
According to the U.S. Department of Energy’s Energy Information Administration (EIA), Americans burned 8.97 million barrels of gasoline last week (this week’s figures aren’t available yet). That’s about 2% more than the week before.
RELATED STORIES: How Much Do Rising Gas Prices Actually Cost You?
“These supply and demand dynamics have contributed to rising pump prices,” AAA explains. “Coupled with volatile crude oil prices, pump prices will likely remain elevated as long as demand grows and supply remains tight.”
But overall, gasoline consumption is down from normal levels. Last week, we burned about 2% less than we did during the same week in 2021.
Oil Companies Won’t Likely Drill for More
Changing demand may be the only thing that will bring pump prices down. Supply isn’t going to rise. The Washington Post reports today, “Three major oil companies have given up opportunities to explore for oil in Alaska’s Arctic National Wildlife Refuge, after the industry and Republican politicians have spent decades working to gain access to the sensitive region.”
RELATED STORIES: See the most fuel-efficient cars in every class
The White House was recently forced to cancel auctions for new drilling rights due to a lack of interest.
“Demand Destruction” Hasn’t Come
So, experts say, the only thing that can drive prices down is reduced demand.
“We’re seeing demand destruction around the world, but in the United States, it seems like people will be stubborn about it,” Tom Kloza, global head of energy analysis for the Oil Price Information Service, told CNN. “California has taught us that $6.20 a gallon can be tolerated.”
Mark Zandi, chief economist for Moody’s Analytics, says that Americans may cut their spending on other items to afford more gasoline. “I think people will economize on their driving only so much. The hit will be to other forms of discretionary spending.”
“Oil and gas companies do not want to drill more,” Pavel Molchanov, an analyst at Raymond James, told a conference earlier this year. “They are under pressure from the financial community to pay more dividends, to do more share buybacks, instead of the proverbial ‘drill baby drill,’ which is the way they would have done things 10 years ago. Corporate strategy has fundamentally changed.”
Ways to Save at the Pump