Tuesday, March 08, 2005

Gas & Oil at a Glance: 030805

Gasoline prices shot up another 7.1 cents, comparing federal government Energy Information Administration figures from February 28 to March 7, 2004. We've effectively reached the $2.00 per gallon average across the USA's 50 states for the first time since November 8 of last year. But the week over week rise is the highest since May 10 of 2004, when it skied up by a 14 year high of 9.7 cents.

In the larger historical context, this leap has even greater significance. Since the EIA has been kind enough to make data available for every week since January 21, 1991, I took a look and found that this current 7.1 cent increase is tied for the fourth highest over that long time span, exceeded only by the May 2004 'all time' record, followed by a 7.9 cent advance on March 11, 2002 and by a 7.7 cent spike on May 7, 2001.

Despite this rapid rise, the contemporaneous relationship of gasoline to oil prices has not budged. The GOP Ratio as I call it – aka the Gas to Oil Price Ratio in long form – remains at a low 1.56, as it was the prior week, because the price of oil has gone up commensurately. Budging barely, the 'spread', the price difference in cents between the per gallon retail gasoline price and that for an equivalent amount of oil, has increased only slightly, edging up an even two cents over last week.

As I suggested last Tuesday in my maiden post for this series, these figures suggest anything but the cost of gasoline decreasing in the coming weeks and months. Whether one studies the last year or peruses the previous five years, it's easy to see that the GOP Ratios and spreads are down from their typical levels. For instance, considering that the average spread for 2004 was 86.72 cents, a national average that's higher by some 15 cents, around $2.15 per gallon, would be called for from that perspective.

Plus, we're closing in on the April - June quarter, when refineries revamp for summer driving season, an event tending to drive up costs. And, from the news that I'm reading, we don't appear to be victim to any big supply disruptions at this time, such as those attributable to 'geopolitical' upsets or to some sort of weather event. With available oil already regarded as tight, introduce a man made crisis, a devastating hurricane or some other unexpected one-time occurrence and $53 a barrel might seem cheap.

Now that I am trying to acquire petroleum price information as up to date as possible for the publication of this post, unfortunately, I'm finding a rather meaningful difference between the numbers released by the widely relied upon AmericanAuto Association and others like the Energy Information Administration, Trilby Lundberg and Gaspricewatch.com.

For March 7, the AAA released a national mean of $1.938. On the same date, Gaspricewatch, relying for the most part on volunteer spotters, reported a $2.01 average, and the Energy Information Administration was at $1.999, the figure used for this report. For March 4, Lundberg came in at $1.97. So, one of my projects for this week is to try to get at the reasons for this discrepancy. I'll letyou know what I find.

For more background and information on the methodology behind this regularly scheduled report, please see this prior post. See ya next week.


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