Drivers Are Starting to Get Back on the Roads
Americans are starting to get back on the road and capitalize on low gas prices, according to the Wall Street Journal.
States are starting to reopen and the decimated oil industry is starting to see demand tick up. There has been a moderate resurgence of traffic around major cities. Furthermore, many people are avoiding public transportation and airplanes.
The increase in drivers has coincided with a recovery in consumer spending. Economists hope that the economy is recovering from the bottom of the fallout induced by the pandemic. The positive economic data is also contributing to a rally in investments. The S&P500 and oil prices are creeping towards their February highs.
The national average for a gallon of gas has increased for four consecutive weeks now, from a four year low of $1.74 in late April to $1.96 on May 25. Requests for driving directions on Apple Inc.'s Maps app have risen to mid-January levels.
“We’re already seeing some improvement in demand, and this is going to continue as people return to more normal activities,” Valero CEO Joe Gorder said in late April. Shares of Valero, Phillips 66 and Marathon Petroleum have all surged 46 percent or more so far this quarter.
However, refining activity still remains low and analysts are expecting a slow recovery to normal capacity. Oil prices have rebounded to the mid-$30s per barrel after falling below $0 on April 20. However, current levels are not good enough for many companies to turn a profit.
“The first leg of a recovery from a really low point is the easiest part,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. “There’s still a lot of crude around.” She has been driving more recently and has noticed more cars on the road in Hoboken, N.J., but expects it to take time for demand to fully rebound.