Record Drivers for July 4th Weekend to Boost US Gasoline Demand

Chunzi Xu, Bloomberg News

Vehicles on Highway 101 in San Francisco, California, U.S., on Tuesday, March 29, 2022. California Governor Gavin Newsom's proposal to give $400 to every car owner to offset record-high gasoline prices has prompted criticism that it undercuts the states aggressive climate goals. , Bloomberg

(Bloomberg) -- Gasoline demand in the US is set to get a bump this July 4th weekend as a record number of drivers are expected to hit the road with some relief at the pump.Around 42 million people will hit the road this Independence Day weekend, exceeding 2019 levels by half a million, according to a forecast from auto-club AAA, which defines travel as moving 50 miles or more from home. Average pump prices have been falling for the past 16 days to $4.857 a gallon as of Wednesday, down from a record $5.016 in mid-June, according to AAA.

Capping pump prices, a main contributor to inflation, has been a priority for the Biden administration. Measures such as releasing one million barrels a day of crude from the country’s emergency reserves have failed to prevent US oil supplies from shrinking to their lowest in nearly two decades. The retreat in pump prices is in part a result of lackluster fuel consumption so far this driving season.

The four-week average of gasoline demand fell further below pre-pandemic norms last week, contributing to an unseasonal build in national stockpiles, government data show. These signs of weakness helped drive gasoline futures down to a seven-week low of $3.57 a gallon in intra-day trading on Thursday, signaling pump prices could retreat further during the holiday weekend. However, several states are hiking gasoline taxes starting July 1, including California, where the excise tax for a gallon of gasoline will rise to 53.9 cents, up from 51.1 cents.