Year on year sales of gasoline in the United States surpassed 2020 levels for the first time, precisely on the one-year anniversary of the arrival of the Covid-19 disease, according to data from Oil Price Information Service (OPIS) by IHS Markit.
Firstly, sales levels peaked beyond the 2020 mark for the first time in the week ending March 20, 2021. Precisely at the one-year anniversary of the arrival of the Covid-19 disease, which caused a worldwide pandemic. Nevertheless, gasoline sales are still 16% below pre-pandemic levels.
Consequently, the news is more a reflex of the demand destruction from a year ago, than a true economic recovery, says the report. “The year-on-year increase in fuel demand from March 2020 is certainly welcome news for the recovery of the economy; and the beginning of the return to normal life for the American people,” said Brian Norris, executive director of retail fuels, OPIS by IHS Markit.
But he also remarked: “But the real measure of recovery will be a return to pre-pandemic levels. It’s there that progress remains slow and, looking at gasoline, we still have a long way to go.”
Secondly, before the week ending March 20, gasoline volumes hovered around 15% to 18% below pre-pandemic levels since the start of 2021. In this regard. “Retail gasoline sales volumes moving into positive territory compared to prior-year numbers are not due to a major increase in demand; but more reflect the massive declines that were seen at the pump during the same period last year.” The study remarks.
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Gasoline sales volumes differ by region
Moreover, in the week ending March 21, of 2020, saw volumes trail 2019 levels by 23,6%; those levels were not seen since the Nixon Administration in the early 70’s. Volumes then culminated 47,5% behind prior-year levels in the week ending April 11.
On the other hand, the rebound in gasoline sales varies by region, according to the study. Southwest region surpassed 2020 volumes by 15%. While, the Southeastern part of the United States surpassed 2020 levels by only 8.6%. This difference is due to many states in the Southeast not moving as quickly to mandated stay at home orders as the rest of the country.
In fact, some states present a sharp increase, like California. Compared to last year, gasoline sales were up 14.6% in California, however volumes still trail same-week 2019 by 22.7%. Florida, on the other hand, saw an increase of just 6,4%.
Finally, with the vaccine rollout in the Biden administration there is some optimism that demand could rebound more. In fact, it is possible that demand comes to pre-pandemic levels again.
However, “the logic that gasoline demand will suddenly and permanently return to pre-pandemic levels fails to take into account the lingering effects of unemployment; dramatic cuts in urban, suburban and rural events; and hybrid models for commuting that allow for more people working from home,” said Tom Kloza; global head of energy analysis, OPIS by IHS Markit.