Gas Price Surge Slows Tue, Sep 24, 2019 While last week's surge in oil prices after the attacks on Saudi Arabian oil facilities stoked concerns of a spike higher in gas prices, the rally has already started to fizzle out. As of yesterday, the national average price of a gallon of gas was $2.66, and while that's ten cents higher than where prices were before the attacks, we've already started to see prices ease for three days in a row now. With a YTD gain of 17.9%, this year's move has now been slightly above the historical average (17.3%) dating back to 2005 and well above the median of 12.6%. The chart to the right compares the change in gas prices so far this year to a composite of the YTD change for all years since 2005. Prior to the attacks in Saudi Arabia, prices were trending modestly below the historical average, but now prices are right in line with the historical average. If the pattern continues to hold, we should see prices resume their downward trend from now until year-end. Given the seasonal nature of gas prices, where they are now versus six months ago probably isn't as important as the year/year change. If prices are lower now than they were at this time last year, consumers will feel more flush while higher prices may crowd out spending in other areas. After about two years where gas prices were consistently higher on a y/y basis, we've recently seen a trend where prices have been down modestly. While the decline probably hasn't been big enough to have a big impact, at the margin, consumers have seen a bit of a tailwind from lower prices.
Gas Prices vs Crude Oil Mon, Apr 20, 2020 With oil in the midst of what could be its sharpest downturn in history, it's not a surprise to see that gas prices at the pump have also been declining. Looking at the chart below, the national average price of gasoline has had a close correlation to the price of crude oil, but looking a little closer, prices at the pump haven't dropped nearly as much as the price of crude oil. For example, while crude oil prices are at their lowest levels since the 1990s, the national average price of a gallon of gas is still above where it was at the lows in 2016. Another way to illustrate this is by comparing the performance of crude oil vs average prices at the pump over the last 50-trading days. During that span, front-month WTI prices are down 78% while average prices at the pump are down less than a third of that at 25.6%. With a spread of over 50 percentage points, the performance gap between the two has never been wider. While gas prices are understandably lower so far this year, these declines have come at a time when prices have consistently risen. Going back to 2005, this is the first year that average gasoline prices have been below $2 per gallon at this time of year. Not only that but it also the first time that prices have been down on a YTD basis through 4/20 as well. Normally, prices at the pump are up over 15% YTD at this time of year, but due to the global pandemic, prices this year are down almost 30%. Now, if only consumers had anywhere to go and take advantage of these abnormally low prices!
