The retail price of gasoline in the United States on May 22, the day before Memorial Day weekend, averaged $3.53 per gallon (gal), up 26% (or 1.24/gal) lower than the annual price adjusted for inflation. Gasoline prices last year were the highest since 2012. The American Automobile Association (AAA) expects 6% more miles driven this Memorial Day weekend compared to last year due to lower gasoline prices. Although retail gasoline prices have dropped from a year ago, they are still higher than in the 2019-2021 period.
Retail gasoline prices have fallen since last year due to lower crude oil prices. Crude oil is the main component of the retail price of gasoline, and accounts for more than half of the retail price. As of May 23, the May average price for Brent crude oil was $76 per barrel (b), a 35% ($41/b) decrease from May’s inflation-adjusted past average. The price of May Brent crude oil is also adjusted slightly below the average growth of May 2019 and 2021, whose crude prices have come due to rising global production and decreasing global economic conditions.
Although crude oil prices are now lower than prices adjusted for growth in 2019 and 2021, gasoline prices are higher. One reason for the higher retail gasoline prices is that gasoline inventories were at or below five-year levels (2018-22) in 2023 and as of May 24, they are 10% below the five-year average for May, according to our public weekly. Oil Report. More gasoline is now being consumed in the United States than in any year since the start of the pandemic, which has reduced inventories.
Gasoline prices vary regionally, taking into account local supply demand conditions, state fuel conditions, and state taxes. Gasoline prices are typically the highest on the West Coast due to the region’s limited connections to other major refining centers, local supply and demand conditions, and California gasoline specifications that make it more expensive to manufacture. Western state incomes are also higher than the national average. Regional gasoline prices are typically the lowest on the Gulf Coast, where nearly half of US refining capacity is located and more gasoline is produced than consumed. Gulf Coast states also tend to have lower gas taxes than the national average. Heading into Memorial Day weekend, retail gasoline prices averaged $4.51/gal on the West Coast and $3.04/gal on the Gulf Coast. Prices averaged $3.38/gal on the East Coast, $3.47/gal in the Midwest and $3.58/gal in the Rocky Mountains.
