After breaking a ten week decline last week, Tennessee gas prices continue to inch higher. The Tennessee Gas Price average is now $1.63 which is only a two cent increase over last week and three cents higher than one month ago. To keep things in perspective, Tennesseans are still experiencing gas prices that are 92 cents cheaper compared to this time last year.
"Gas prices around Memorial Day have not been this cheap in nearly 20 years. However, as the country continues to practice social distancing, this year's unofficial kick-off to summer is not going to drive the typical millions of Americans to travel," said Megan Cooper, spokesperson, AAA - The Auto Club Group. "Despite inexpensive gas prices, AAA anticipates this year's holiday will likely set a record low for travel volume."
- Tennessee is the 10th least expensive market in the nation
- 23% of Tennessee gas stations have prices below $1.50
- The lowest 10% of pump prices are $1.42 for regular unleaded
- The highest 10% of pump prices are $1.95 for regular unleaded
National Gas Prices
Pump prices continue to increase across the country with nearly every state's average pushing more expensive on the week, on average by four cents. At the start of the Memorial Day work week, the national gas price average is $1.87.
The last time the national gas price average leading into the holiday was under $2/gallon was 17 years ago in 2003. That year motorists paid, on average, $1.50 to fill-up. Gas prices this year won't be as cheap as 2003, but today's national average is a dollar cheaper than one year ago.
Americans can expect gas prices to continue to push more expensive, possibly hitting $2/gallon in the next few weeks. This is mostly due to demand increasing as states re-open. This week will also bring the Environmental Protection Agency's waiver on the sale of winter-blend gasoline to an end. Stations will switch over to summer-blend gasoline, which has a lower Reid Vapor Pressure to prevent excessive evaporation when outside temperatures rise. Reducing the volatility of summer gas decreases emissions that contribute to unhealthy ozone and smog levels. Typically, the switchover to summer-blend can cause gas prices to spike during the summer driving season, but that will likely not be the case this year due to the impact of COVID-19 on demand and crude oil prices.
National Oil Market Dynamics
At the end of Friday's formal trading session, WTI increased by $1.87 cents to settle at $29.43 per barrel. Crude prices increased last week amid growing market optimism that crude demand continues to rebound as more states re-open and demand for gasoline has grown in recent weeks. For this week, crude prices may continue to rise if the market believes that the 9.7 million b/d production reduction agreement for May and June 2020 between the Organization of the Petroleum Exporting Countries and other major crude exporters, including Russia, is helping to rebalance the global oil market as demand remains low due to COVID-19.
Memorial Day Travel
For the first time in 20 years, AAA will not issue a Memorial Day travel forecast, as the accuracy of the economic data used to create the forecast has been undermined by COVID-19. The annual forecast - which estimates the number of people traveling over the holiday weekend - will return next year.
Anecdotal reports suggest fewer people will hit the road compared to years past for what is considered the unofficial start of the summer travel season.
"Last year, 43 million Americans traveled for Memorial Day Weekend - the second-highest travel volume on record since AAA began tracking holiday travel volumes in 2000," said Paula Twidale, senior vice president, AAA Travel. "With social distancing guidelines still in practice, this holiday weekend's travel volume is likely to set a record low."