Great Lakes Wire

Gas prices across the country continued to decline again in the last week, but Americans are still paying a premium at the pump. As Michigan's average is reportedly $4.49 per gallon, Friday's Gasoline Misery Index for the state currently sits at $690. Andrew Gross, spokesperson of American Automobile Association (AAA), said a combination of both lower oil prices and lower domestic demand are contributing to the drop in pump prices.

A decline in both crude oil prices and Americans' demand for gas have allowed for gas prices to decrease slightly in the United States over the past couple of weeks. Michigan's current average price per gallon has been reported at $4.49 – $1.24 higher than a year ago. The latest Gasoline Misery Index shows that on average, Michiganders will spend $690 more annually on gasoline now than they did at this time last year.

The Gasoline Misery Index tracks how much more (or less) the average American consumer is paying for gasoline on an annualized basis. Compiled using gas price data from AAA, average fuel efficiency (mpg) data from the U.S. Department of Energy and average miles driven from MetroMile.com, the index tracks the average price of a gallon of regular gasoline and adjusts using the average miles traveled by the average miles per gallon of American cars.

“Global economic headwinds are pushing oil prices lower and less expensive oil leads to lower pump prices,” Gross said. “And here at home, people are fueling up less, despite this being the height of the traditional summer driving season. These two key factors are behind the recent drop in pump prices.”

On Thursday, AAA reported that according to the latest data from the Energy Information Administration (EIA), gas demand increased from 8.06 million b/d to 8.52 million b/d last week. Yet, the rate is 800,000 b/d lower than last year and is in line with demand during the middle of July 2020, when COVID-19 measures curbed demand. As long as these supply/demand dynamics hold, AAA predicts drivers will continue to see a temporary relief in pump prices.

According to the EIA, in January 2021, the national average price per gallon of gasoline was $2.33. When compared to Friday's national average price of $4.41, gas prices have increased 89.3%, a number the Gasoline Misery Index refers to as the Biden Misery Index. Americans are spending an average of $1,092 more per year on gasoline today since the president entered office in January.

With the goal of bringing down gas prices for American consumers, Biden announced the use of Strategic Petroleum Reserve (SPR) crude oil on March 31. Data shows that since the release, the president has reduced the SPR by nearly 85 million barrels of our country's emergency oil.

Mark R. Robeck, deputy general counsel for Energy Policy in the United States Department of Energy, pointed out in a RealClear Energy article, "Beginning his first day in office, Biden has been hamstringing fossil fuel producers. The administration canceled the Keystone XL pipeline, suspended new offshore lease sales in Alaska and the Gulf, reduced acreage available for federal leasing and imposed burdensome regulations on new energy production and infrastructure."

Robeck said Biden's 180 million barrel release from the SPR "only reduces national security, but not gasoline prices."