Are you looking for one more signal that the US economy is on the way again? Take a look at the price on the pump.
Motorists woke up Monday morning to see more signs of economic recovery – which will ruin your wallet – when gas station prices for credit card purchases at a Sunoco station on 8 Mile Road and John R in Detroit hit $ 3.09.
Another Sunoco station just a few miles north on Woodward Avenue in Pleasant Ridge had a gasoline price of $ 3.29 a gallon on Monday morning for credit card purchases.
Gasoline no longer costs $ 2 a gallon
Say goodbye to those two dollar bargains. We are now looking at gas prices that are pretty close to what they were in June three years ago.
So much for last summer’s deals where gasoline in Metro Detroit averaged about $ 1.07 per gallon lower in the same week last June, according to GasBuddy.com. The average for Metro Detroit at this time last year was about $ 2.10 per gallon.
Cars no longer collect dust in the garage
Gone are the days when cars were left untouched in the garage as there was nowhere for consumers to go during the economic shutdowns that took place to prevent people from getting seriously ill and dying after contracting COVID-19.
Gasoline demand in the US slumped 60% overnight last spring, said Patrick DeHaan, head of petroleum analysis at GasBuddy.com.
The COVID-19 vaccines became more readily available this spring and more people were vaccinated, giving businesses and consumers a chance to get back to normal.
“Now we’re dealing with a double dose of recovery,” said DeHaan.
Consider this statistic: On March 28, 2020, the same Pleasant Ridge gas station was selling a gallon of gas for just $ 1.89 for credit card purchases – and $ 1.79 a gallon if you paid cash – when the economic downturn hit Michigan.
And gas prices continued to fall through April 2020. The average price in Metro Detroit was $ 1.41 per gallon on April 25, 2020, a low during the pandemic, according to GasBuddy.com. That was a drop of $ 2.613 a gallon on Jan 9, 2020, before the coronavirus panic broke out.
“The economic recovery is currently the strongest force in prices,” said DeHaan.
More and more people are driving back to work – and many more are hopping in the car to go shopping, go to a baseball game, or go to a national park on vacation.
Gasoline prices in Metro Detroit rise by almost 9 cents in a week
In the past week alone Gas prices in Detroit have risen 8.9 cents per gallon and an average of $ 3.16 per gallon on Monday, according to GasBuddy’s daily survey of 1,734 Detroit locations.
Detroit gasoline prices are 19.1 cents a gallon higher than a month ago.
The national average price for gasoline is up 1.6 cents a gallon over the past week, averaging $ 3.07 on Monday.
“The Americans won’t let anything stop them this summer,” said DeHaan. “Now people are catching up on the last 15 months of the lockdown.”
Shopping for gas is still important, of course.
According to GasBuddy price reports, the cheapest station in Detroit was $ 2.77 a gallon on Monday, while the most expensive was $ 3.49 a gallon.
The reports also showed that the lowest price in Michigan on Monday was $ 2.79 per gallon while the highest was $ 3.39 per gallon, a difference of 60 cents per gallon. (The timing of the information received in the survey will vary, and prices will reflect this difference.)
If the economy continues to recover this summer as expected, some experts believe that gas prices could continue to rise from here.
But many say they don’t believe that $ 4 a gallon of gasoline is just around the corner.
“I can’t say I’m expecting $ 4 a gallon – that still seems unlikely,” DeHaan said.
Gasoline prices in 2013 and 2014 were actually that high in the Detroit metro. The average was $ 3.91 per gallon on June 14, 2014; and $ 4.03 a gallon on the same day in 2013 in Metro Detroit.
We’d have to see crude oil prices rise above $ 100 a barrel to see gasoline prices rise above $ 4 a gallon, said Robert Dye, chief economist at Comerica Bank.
“While the price of West Texas Intermediate crude has risen from a low of nearly $ 10 a barrel (very briefly) in April 2020 to over $ 70 a barrel today,” said Dye, “I don’t expect crude to hold at $ 100 mark soon. “
Supply in the oil market is still strong and alternative energy sources are still on the rise, he said.
Certainly there are still geopolitical risks that could drive up crude oil prices.
However, Dye said, “If we were to experience a supply shock that drove prices up significantly, I would expect more investment capital to flow into US oil production.”
Then, Dye said, domestic supply would rise and gasoline prices would keep in check.
Right now, he said, gasoline prices are rising as economic restraints related to the pandemic ease and consumers and businesses seek to renormalize their behavior.
While this is not a welcome sign on the wallet, it is clearly one for the US economy.