Gasoline Prices Track Crude Oil Costs

Jane Van Ryan
Posted March 11, 2010

The average U.S. retail price for regular gasoline rose by 4.9 cents to $2.751 per gallon for the week ending March 8, according to the Energy Information Administration (EIA). This average price is higher than one year ago when the average pump price was 81 cents lower and crude oil costs were 88.9 cents a gallon lower.

Gasoline is refined from crude oil, and gasoline prices generally track crude oil prices, as the chart below demonstrates.

Historically, there has been a lag before crude oil price changes are reflected in retail gasoline prices. On March 8, crude oil ended the NYMEX trading session at $81.87, which was nearly 80 percent higher than a year ago and $3.17 per barrel higher for the week.

Gasoline supplies are ample this year. Gasoline stocks are above last year's and the five-year average. Furthermore, gasoline production in January was the highest January production on record. Demand for gasoline in January was 0.9 percent higher over the same month a year ago. Information about February gasoline demand is expected to be released on March 17.

In addition to crude oil costs, several other factors can affect gasoline prices, including refinery outages and transportation problems. The switch from winter gasoline to summer gasoline also can have an impact.

Recently, Robert Rapier of the R-Squared Energy Blog posted an excellent explanation of the seasonal change in gasoline formulations. His article, which was posted on Sunday, March 7, is available here.