In a recent Bloomberg article, Validere’s Mark Le Dain predicts that this summer will reach an all-time high for gasoline consumption. Keep reading for more details.
Oil prices today have surpassed pre-pandemic levels. Much of oil’s recovery this year has been as a result of supply-side changes, including the OPEC+ alliance and US shale producers not yet in full force. As cities across the US are reopening, demand is set to take off this summer.
With many Americans having cancelled their trips last year, there is a lot of pent up demand for travel. National parks, rental car facilities, and theme parks are all preparing for a surge of visitors. Return to work will also contribute to oil’s recovery. Over time, workers are slowly starting to return to the offices and for a greater portion of their workweek.
The summer of 2019 was the most recent high for gasoline consumption. Mark Le Dain, Validere’s VP of Strategy, predicts that this summer will see demand levels even higher. To surpass 2019, the US needs to add approximately 1 million barrels of gasoline a day to current levels.
With a boost in the demand for fuel, an increase in greenhouse gas emissions will come. Both the return of road trips and air travel are set to bring back carbon emissions after a period of record lows.
The one factor that could diminish the oil price surge is another wave of high COVID-19 cases. The U.S. Centers for Disease Control and Prevention has commented that there is a low risk for fully vaccinated Americans but also warning against rising cases.
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