AAA reveals reasons behind gas, diesel price increases

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TENNESSEE (WJHL) — Motorists remain concerned regarding a recent increase in gas and diesel prices, and Tennesseans can expect to see those prices remain high until later into 2021.

News Channel 11 spoke with AAA spokesperson Megan Cooper, who said these increases stem from a rise in the crude oil price, among several other factors.

“A couple of weeks into this year is when we really started to see those gas prices trickle up,” Cooper said. “A couple months ago, the biggest driving factor that we saw affecting gas prices were those increasing crude oil prices.

“Recently, we’ve seen more of a supply and demand factor take over into really what’s pushing our gas prices higher.”

Another factor that plays a role in the swelling of gasoline and diesel prices includes last month’s deep freeze along the Gulf Coast, resulting in a shutdown in refineries.

“We also saw here domestically a couple of weeks ago that arctic weather in Texas throughout the Gulf Coast region,” Cooper said. “Typically, when we receive those weather threats to the Gulf Coast region, they come in the form of hurricanes, so this was a little bit odd. The reaction in the market was very similar to what we would see if a hurricane were to threaten the Gulf Coast.”

The upcoming warm seasons will see that prices stay higher than usual as gasoline switches blends.

“This is the time of year that the refineries go into maintenance season and prepare to switch from winter-blend gasoline to summer-blend gasoline,” Cooper said. “Summer-blend gasoline is a little more expensive to produce, and we typically see that reflected in our gas prices.”

With warmer seasons also come vacations, and as COVID-19 vaccines become more widespread, many people will start feeling comfortable traveling again, increasing the demand and in turn, the prices.

“What we’re seeing is that the COVID-19 vaccine is providing optimism in the market,” Cooper said. “So, early on, there was that optimism that there could be some kind of return to travel at some point in 2021.

“We’ve done some research through AAA here in Tennessee, and one of the biggest factors that people are considering when it comes to what would make them more comfortable traveling is that vaccine. So, I think once we start to see that vaccine become more widespread, people will be more comfortable traveling. I think we will see that increase in demand as well. So, one of the biggest factors, I think, is that from what we’ve seen so far is that when people are comfortable traveling, more than likely, that will be in the form of a road trip…which would cause that increase in gasoline demand.”

Some have blamed the spike in gasoline and diesel prices on the halt of the Keystone Pipeline project when President Joe Biden decided to revoke its permit.

AAA, however, said this factor has little — if anything — to do with gas and diesel price increases.

“From what I understood, that pipeline was not operational yet, so it really shouldn’t have a big impact on our gas prices,” Cooper said. “Right now, currently, the biggest thing that is affecting our gas prices is that tightening supply globally and domestically as well as that increase in gasoline demand.”

While gas prices do remain higher than usual, Tennessee boasts lower prices compared to those in the West Coast and Northeast regions of the country, according to Cooper.

“This is the first week that Tennessee has not fallen in the top 10 least expensive markets across the nation,” she said. “This week, we fell at 12th least expensive in the nation, so even though we have seen some very significant price increases over the last month, we’re still seeing some of the cheapest gas prices compared to other states in the country.”

“There is a bit of a silver lining when you start to compare gas prices across the country. In the last five weeks, we’ve increased about 45 cents. We had six metro areas in Tennessee that saw a 10-cent or more increase over last week, and four out of those six are in the greater East Tennessee region. So, it’s not just Johnson City that’s seen a significant increase over last week.”

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