Monday, February 28, 2005

Gas & Oil At a Glance: A New View of Gasoline Prices

Everyone knows that the toll for oil drives the price of gasoline. But after looking at 14 years of data during the past few months, I've discovered that it's not as straight forward as some might think, especially with the historic highs that have taken place in 2004.

Having a clearer understanding of where gasoline prices stand relative to those of oil should be helpful in looking forward.
So, starting Tuesday, March 1, and every week thereafter, I plan to publish the 'Oil-Gas-Ratio-Spread' Sheet within a feature called 'Gas & Oil at a Glance'. Mainly, I believe that this sheet will serve as a quick way to gain a better sense of where the cost of gasoline will be heading over the near term.


This snapshot will include the current per barrel oil price in the United States for the prior day, using the 'West Texas Intermediate' variety of crude as the benchmark, along with the national average price per gallon for Regular Self-Serve Unleaded Gasoline. Derived from these two figures will be the 'Gas to Oil Price Ratio', that is, the cost relationship between a gallon of gasoline and the same quantity of crude oil, along with the 'Spread', that being the difference in price between retail gasoline and crude oil on a per gallon basis.

You'll also have brief commentary from me, if I believe it will deliver any added value to the data presented. For historical context, figures from the previous week, 4 weeks back, 3 months, 6 months, 1 year, 3 years, 5 years and 10 years ago will also be provided.

The final numbers to be kept for oil and gasoline will be those provided by the U.S. Government's Energy Information Administration. Because there is typically a lag time in the posting of the amount paid for oil on the EIA web site, for each new week I'll use prices provided by Bloomberg.com for that commodity. I don't expect to see a meaningful difference between these sets of numbers, but I will be keeping an eye upon it.

You're invited to check in with this blog each week for this information. It should be posted before 8:00 AM EST on Tuesday, except for those weeks when oil is not traded on Mondays. Let's see how it goes.

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