The average price of a gallon of gas across the country rose to $2.40 on Monday, according to data compiled by the American Automobile Association (AAA) via The South Florida Sun-Sentinel. That price rise is the highest in 11 months—which seems a bit odd, considering we’re in the midst of the worst part of the pandemic so far. Many businesses are still shut, theaters and restaurants are closed, and millions of people are still working from home. And vacations? Forget about them.
Given all this, Americans are driving less and thus using less gas, not more. So why are prices rising? It comes down to one thing: hope. And that’s why, despite the impact on your wallet, there’s reason to be glad about the rising price at the pump.
Optimism over the vaccine rollout and a belief that the worst will soon be behind us is causing traders to drive up the price of crude oil futures. Futures are a bet that a certain commodity—crude oil, in this case, the main ingredient in gasoline—will be worth more in the months ahead. Those traders wouldn’t be driving up crude oil futures if they thought the global economy and the state of the world was going to be getting worse, not better. And as it gets better, there will be more demand for crude oil as the machinery of the global economy starts cranking again.
As AAA’s spokesman Mark Jenkins told the Sun-Sentinel, “the biggest contributor to rising oil prices is the hope in the market that the COVID vaccine will help global fuel demand recover.”
The only question now is: How much will gas prices rise as optimism about the pandemic’s end grows? GasBuddy’s head of petroleum analysis, Patrick De Haan, told the Sun-Sentinel that as states reopen by the summer and people head out to beaches, sporting events, and other recreation spots, we can expect gas prices to return to around the $3 per gallon level.
And while the low cost of gasoline over the past year has been nice for consumers, it’s fair to assume that most people would pay just a little more at the pump if it was a sure sign we’re emerging from the COVID-19 pandemic.