One year after first major COVID-19-related declines, gasoline demand improves. But recovery toward pre-pandemic levels remains slow
GAITHERSBURG, Md.--(BUSINESS WIRE)--Year-on-year gasoline sales in the United States have moved into positive territory for the first time—on the one-year anniversary of the first major declines that resulted from COVID-induced stay at home orders. However, demand still trails pre-pandemic levels by a considerable margin, according to the latest data from Oil Price Information Service (OPIS) by IHS Markit (NYSE: INFO).
U.S. gasoline same-store sales in gallons for the week ending March 20, 2021 were 10.1% higher than 2020, according to OPIS Demand, a weekly survey of more than 25,000 fuel stations nationwide.* Nevertheless, same-store gasoline sales were still 16% below pre-pandemic levels.
“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 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.”
Prior to the week ending March 20, 2021, gasoline volumes had mostly hovered in the range of 15% to 18% below prior-year levels since the start of 2021. The main exception was the week ending February 20, which saw a year-on-year decline of 22.4% due to impacts from Winter Storm Uri.
Retail gasoline sales volumes moving into positive territory compared to prior-year numbers for the week ending March 20 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 week ending March 21, 2020 saw volumes trail 2019 levels by 23.6%, the first week in a four-week stretch that saw weekly U.S. gasoline sales volumes plummet to levels not seen since the Nixon Administration was in office in the early 1970s, culminating with volumes 47.5% behind prior-year levels the week ending April 11.
The extent of the current rebound varies by region. The Southwest region surpassed 2020 volumes by 15%. Meanwhile, the Southeastern part of the United States surpassed 2020 levels by only 8.6%, largely due to many states in the Southeast not moving as quickly to mandated stay at home orders as the rest of the country did last year.
The regional disparity in gasoline demand recovery is also apparent when looking at state-level data. California saw some of the earliest declines in gallons sold due to the west coast largely being the early epicenter of the COVID-19 pandemic in the United States. Compared to last year, gasoline sales are up 14.6% in California, however volumes still trail same-week 2019 by 22.7% on a same-store basis. Florida, on the other hand, was not as quick to enact quarantine mandates, and the data paints a very different demand picture. Fuel retailers in Florida saw a much-smaller 6.4% increase versus last year, but only trail demand levels from two years ago by 11.2%.
There is optimism that additional “pent up” demand could be released this summer, with the Biden Administration announcing that every adult in the U.S. will be eligible for the COVID-19 vaccine no later than May 1.
It is possible that gasoline demand could come close to or even surpass pre-pandemic levels at times. But still to be determined are the lasting impacts to work, lifestyle and consumer habits.
“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. “Even as the country gets back to normal, we are still to discover what the ‘new normal’ means.”
About OPIS (www.opisnet.com)
Oil Price Information Service (OPIS) by IHS Markit (NYSE: INFO) provides accurate pricing, real-time news and expert analysis across the global fuel supply chain, including the Spot, Wholesale Rack and Retail markets. OPIS and OPIS PetroChem Wire enable customers to buy and sell oil and gas products with confidence via easy access to transparent data, expert-level customer support, educational events and energy data solutions with Axxis Software and OPIS RetailSuite.
About IHS Markit (www.ihsmarkit.com)
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
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