Demand Destruction Reigns Supreme as Pump Prices Push Cheaper

No Immediate Impact to Pump Prices Expected with OPEC+ Historic Global Reduction

13 April 2020

MADISON, Wis., (April 13, 2020) – The national gas price average has steadily declined for seven weeks, pushing the average cheaper by 61-cents to $1.86 today. During this timeframe (since late February), U.S. demand for gasoline has decreased 44% to 5 million b/d as gasoline inventories build across the country.

“We are seeing fast and furious gasoline demand destruction. The latest data reveals demand levels not seen since spring of 1968,” said Nick Jarmusz, Director of Public Affairs for AAA - The Auto Club Group. “Every U.S. region is seeing builds in gasoline inventories and crude storage, which is just driving pump prices even cheaper.”

On Sunday, the Organization of the Petroleum Exporting Countries plus (OPEC+), led by Saudi Arabia, announced historic global crude productions cuts – nearly 10 million b/d in May and June.

“While the production cut is historic, it’s likely to not have an immediate impact on pump prices given the ongoing impact the COVID-19 pandemic continues to have on crude oil prices and gasoline demand,” added Jarmusz.

At $1.86, today’s national average is 6-cents less than last week, 44-cents cheaper than a month ago and nearly $1 less than a year ago.

Wisconsin is not only experiencing one of the largest weekly decreases (-13 cents), but a monthly difference (-85 cents) and a yearly difference (-$1.50). It is also one of the least expensive markets ($1.30).




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Click here to view current gasoline price averages

Oil Market Dynamics

At the end of Thursday’s formal trading session, WTI decreased by $2.33 to settle at $22.76 per barrel. Crude prices were volatile last week, during the run-up to OPEC’s historic agreement with its allies, including Russia. The group met to discuss global crude productions cuts of up to 9.7 million b/d for May and June 2020. Under the new production reduction agreement, OPEC and its allies expect total global oil cuts to amount to more than 20 million b/d or 20 percent of global supply. Effective May 1, the production cuts are expected to ease in June, but some restrictions will remain in place through April 2022. Crude prices will likely remain volatile this week, as the market assesses if the production cuts are sufficient to hold back growing global crude inventories as COVID-19 continues to push down demand.

Gas Price Survey Methodology
AAA updates fuel price averages daily at Every day up to 130,000 stations are surveyed based on credit card swipes and direct feeds in cooperation with the Oil Price Information Service (OPIS) and Wright Express for unmatched statistical reliability. All average retail prices in this report are for a gallon of regular, unleaded gasoline.

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